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Wall Street pulls back after Tesla drops on Musk-Trump clash

Trump warned of retribution against Tesla and other Musk ventures after the billionaire railed against his sweeping tax cut bill

By AFP

Published: Jul 2, 2025 10:25:11 AM IST

Updated: Jul 2, 2025 10:39:46 AM IST

Traders work on the floor of the New York Stock Exchange (NYSE) at the opening bell in New York City on June 30, 2025. Wall Street stocks pushed into record territory yet again on Monday amid optimism the United States would reach trade deals with its partners ahead of a self-imposed deadline next week and extend tax cuts. Image: Timothy A. Clary / AFP

Wall Street stocks retreated from records early Tuesday while Tesla sank as President Donald Trump's sweeping tax cut bill faced hurdles in Congress and renewed criticism from Elon Musk.

Prospects for the legislation, which also contains deep cuts to social spending programs and clean energy, looked uncertain as senators sparred over numerous amendments.

Meanwhile, Trump warned of retribution against Tesla and other Musk ventures after the billionaire railed against the legislation, battering shares of Musk's electric car company.

About 25 minutes into trading, the Dow Jones Industrial Average was up 0.3 percent at 44,214.87.

The broad-based S&P 500 dipped 0.1 percent to 6,197.55, while the tech-rich Nasdaq Composite Index declined 0.3 percent to 20,312.16.

Shares of Tesla sank around five percent after Trump said he would consider deporting Musk and directing the Department of Government Efficiency (DOGE) to scrutinize the Tesla and SpaceX founder's government subsidies.

Musk, a mega-donor to Trump in the 2024 election who headed DOGE before leaving Washington earlier this spring, has called for a new political party in response to Trump's bill.

Also read: US Congress moves forward with spending cuts shaped by Elon Musk's DOGE

The row weighs on investor sentiment because "Tesla is extraordinarily popular with speculative traders," said Steve Sosnick of Interactive Brokers.

"If there's a big drop in that stock, I do think it sort of hurts the mood of the market."

Analysts also said the market was poised for a pullback following an end-of-the-quarter influx of money from investors.

Among other individual companies, Boeing rose 0.8 percent after it announced it hired Jesus "Jay" Malave as chief financial officer, recruiting the executive from Lockheed Martin.

The company also said it named Stephen Parker as head of the company's defense and space division, after previously appointing him acting head.