US stocks knocked lower by tariff jitters; Musk’s political plan hits Tesla

US stocks knocked lower by tariff jitters; Musk’s political plan hits Tesla

The Straits Times - Sports·2025-07-08 09:00

NEW YORK – Wall Street’s major indexes closed sharply lower on July 7, after US President Donald Trump

while Tesla shares sank after chief executive Elon Musk said he was forming a new US political party.

Indexes added to losses after Mr Trump

, due to take effect on Aug 1. Stocks wobbled further in the late afternoon when he announced hefty tariffs on Malaysia, Kazakhstan, South Africa, Laos and Myanmar.

Last week, both the Nasdaq and the S&P 500

. The latest record finishes came on July 3 after a robust jobs report.

“Markets had been telling us that peak tariff risk is behind us, but to have tariffs back in the forefront is causing some skittishness,” said Ms Emily Roland, co-chief investment strategist at Manulife John Hancock Investments in Boston. “Investors were getting to that period of ebullience in markets and we’re taking a little step back from that.”

But investors likely have some hopes the announcements are not permanent, she said: “That’s the pattern we’ve been in, announcing punitive tariffs and then dialling that back a little bit. That could certainly be the next phase of this back and forth negotiation.”

The Dow Jones Industrial Average fell 422.17 points, or 0.94 per cent, to 44,406.36, the S&P 500 lost 49.37 points, or 0.79 per cent, to 6,229.98 and the Nasdaq Composite lost 188.59 points, or 0.91 per cent, to 20,412.52.

The S&P 500‘s biggest drag came from shares of electric vehicle maker Tesla, which dived 6.8 per cent, after Mr Musk announced

named the “America Party”, further escalating his feud with Mr Trump. It was Tesla’s biggest daily slide since June 5, and its lowest closing level since that session.

Investors also awaited other US trade announcements after Mr Trump said on July 6 that the US was on the cusp of several deals and would notify other countries of higher tariffs by July 9, with new duties to take effect on Aug 1.

On July 7, Mr Trump threatened an extra 10 per cent tariff on countries aligning themselves with the “Anti-American policies” of the Brics group of Brazil, Russia, India, China and South Africa.

In early April, stock indexes saw dramatic volatility after Mr Trump unveiled a base tariff rate of 10 per cent on most countries and additional duties ranging up to 50 per cent on April 2 and then announced a 90-day pause days later.

In early April, the Nasdaq confirmed a bear market, or a 20 per cent drop from its recent record, while the S&P 500 had narrowly averted a bear. Both indexes had returned to record levels by late June.

On July 7, nine of the S&P 500‘s 11 major industry sectors lost ground. The biggest decliners were consumer discretionary off 1.25 per cent and energy down 1.04 per cent. The only gainers were defensive sectors with utilities adding 0.17 per cent and consumer staples, edging up 0.11 per cent.

Shares of WNS Holdings rallied 14.3 per cent after French IT services firm Capgemini agreed to buy the outsourcing firm for US$3.3 billion (S$4.2 billion) in cash.

Mr Trump’s tariff policies have stoked inflation worries, further complicating the Federal Reserve’s path to lower rates. Minutes of the Fed’s June meeting, scheduled for release on July 9, should offer more clues on the policy outlook.

Traders are betting on a roughly 95 per cent probability that rates will remain unchanged in July while the odds for a September cut are close to 60 per cent, according to CME Group’s FedWatch tool.

Another area of investor focus is US tax-cut and spending plans, signed into law by Mr Trump late last week. These are expected to swell the national deficit by more than US$3 trillion in the next decade.

On US exchanges 16.5 billion shares changed hands on July 7 compared with the 18.18 billion average for the last 20 trading sessions.

Declining issues outnumbered advancers by a 3.44-to-1 ratio on the New York Stock Exchange, where there were 209 new highs and 32 new lows.

On the Nasdaq, 1,226 stocks rose and 3,354 fell as declining issues outnumbered advancers by a 2.74-to-1 ratio. The S&P 500 posted 25 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 103 new highs and 54 new lows. REUTERS

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