Wall Street Pulls Back Amid Tesla, Tariff Fears/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ US stocks slipped Tuesday, ending a multi-day rally as Tesla tumbled amid tensions between Musk and Trump. Investors braced for looming tariffs and debt debates. Wall Street faces signs of speculative froth despite recent highs.
US Stocks Market Quick Looks
- S&P 500 dips after setting record highs
- Tesla drops 6.9% as Musk-Trump feud escalates
- Market eyes Trump’s looming tariffs, potential inflation
- Debt debates in Congress add economic uncertainty
- Barclays warns of rising investor euphoria signals
- Treasury yields hold steady ahead of economic data
- European markets fall modestly, Asia mixed
- Nikkei declines while South Korea’s Kospi rises
Deep Look
Wall Street Retreats As Tesla Tumbles And Investors Brace For Challenges
NEW YORK (AP) — U.S. stocks drifted lower Tuesday, snapping a two-day winning streak, as Wall Street’s recent momentum lost steam and Tesla shares took another beating.
The S&P 500 fell 0.3% in early trading, aiming for its first drop in four sessions. The Dow Jones Industrial Average inched down 21 points, or less than 0.1%, while the Nasdaq composite lost 0.5%.
Tesla Plunges Amid Musk-Trump Rift
The sharpest pain came from Tesla, which sank 6.9%, making it the biggest drag on the S&P 500. Tesla shares have now slumped over 21% this year amid increasing friction between CEO Elon Musk and President Donald Trump.
The two men, once political allies, have publicly clashed in recent weeks.
Trump recently hinted at potentially cutting off government subsidies, contracts, or other funding for Musk’s companies, declaring there’s “BIG MONEY TO BE SAVED.”
Tesla investors are already on edge, wary of how political battles could spill over into business operations or dampen public sentiment toward Musk’s enterprises.
Economic Clouds Linger Over Markets
While the stock market has staged a remarkable comeback since a spring sell-off erased nearly 20% from major indexes, risks remain. One big concern is Trump’s proposed wave of tariffs on imports, which could reignite inflation and threaten economic growth if they take effect as scheduled in about a week.
Congress is also in the midst of fierce debates over sweeping tax cuts and other fiscal measures that could push the U.S. government’s debt to new highs. Such ballooning deficits risk fueling inflation, which could force the Federal Reserve to keep interest rates elevated — a worrisome scenario for both stocks and bonds.
Bubbling Signs Of Market Euphoria
Despite these headwinds, strategists at Barclays say they’re detecting echoes of market exuberance reminiscent of past bubbles. One of their indicators measuring “excess optimism” among smaller investors is approaching levels last seen during the 2021 meme stock mania and the dot-com boom of the early 2000s.
Other indicators include renewed enthusiasm for blank-check companies, or SPACs, which seek out private companies to bring public — often with lofty valuations.
Still, the Barclays team led by Stefano Pascale and Anshul Gupta cautioned that predicting exactly when market bubbles burst is famously difficult.
“They can endure far longer than anticipated before correcting,” they wrote.
Bond Yields Steady As Data Looms
Treasury yields remained relatively calm ahead of a slew of economic data expected later this week. The 10-year Treasury yield ticked down to 4.23% from 4.24% the day before.
Global Markets Mixed
In global trading, Europe’s indexes posted modest losses following uneven trading across Asia. Japan’s Nikkei 225 retreated 1.2%, while South Korea’s Kospi gained 0.6%, highlighting mixed sentiment across the region.
Wall Street investors now look ahead to key economic releases, including the monthly U.S. jobs report due Thursday, which could shape expectations for interest rate moves in the coming months.
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