U.S. Stock Markets Shaken by Tesla Slump and Political Tensions
Market News 06 JUN
U.S. stock indexes ended Thursday lower after a volatile session marked by a sharp decline in Tesla shares and escalating political rhetoric. The S&P 500 fell 0.53%, the Dow Jones lost 0.25%, and the tech-heavy Nasdaq 100 dropped 0.80%.
The sell-off was triggered by a more than 14% plunge in Tesla shares following statements by former President Donald Trump, who suggested halting government contracts and subsidies for Elon Musk’s companies. The news sent shockwaves through the tech sector, putting pressure on shares of Palantir, Costco, Brown-Forman, AMD, and others.
Markets Lost Early Gains
The trading day began on a positive note as news broke of a phone call between President Trump and Chinese President Xi Jinping, during which they agreed to resume trade negotiations. However, rising political uncertainty and weak macroeconomic data soon weighed on sentiment.
Economic Data Added to the Pressure
Revised data showed U.S. nonfarm productivity fell by 1.5% in the first quarter, down from a previous estimate of -0.8%, while unit labor costs surged to 6.6%. These figures stoked fears of stagflation. Initial jobless claims also rose unexpectedly to 247,000—the highest level in 7.5 months—raising concerns about a softening labor market.
On a brighter note, the U.S. trade deficit in April narrowed to a 20-month low of $61.6 billion, which could support second-quarter GDP growth.
Fed Officials Signal Caution
Federal Reserve officials maintained a cautious tone, with several stating that interest rates should remain unchanged amid ongoing inflation risks. As a result, markets now assign just a 3% probability to a rate cut at the next FOMC meeting on June 17–18.
Corporate Winners and Losers
Among standout gainers, MongoDB surged over 12% after reporting strong quarterly earnings and raising its full-year profit outlook. Dollar Tree and Five Below also advanced on upbeat sales forecasts and favorable analyst coverage.
On the downside, PVH Corp, DocuSign, Ciena, and Costco suffered notable declines due to disappointing forecasts and earnings. Procter & Gamble fell over 1% after announcing a workforce reduction plan affecting 7,000 employees.
Global Market Snapshot
European and Asian markets ended mixed. The Euro Stoxx 50 rose 0.10%, China’s Shanghai Composite gained 0.23%, while Japan’s Nikkei 225 dropped 0.51%.
Looking Ahead
Investors are now turning their attention to Friday’s key U.S. labor market report. Expectations point to a 125,000 increase in nonfarm payrolls and an unchanged unemployment rate of 4.2%. These figures may prove pivotal for shaping expectations on the Fed’s next policy move.