Trump-Musk Feud Slams Stocks | Stock market news

Making Sense of the Forces Driving Global Markets

By Jamie McGeever, Markets Columnist

There was placenty of meaty news for investors to get their teeth into on Thursday – Us President Donald Trump and Chinese Premier Xi Jinping’s Long -Awaited Phone Call, A Rate Cut and GUDANCE from the European Center Bank, and More Soft Us Labor Market Data. But the biggest market-mover of all? The public ‘bromance’ Break Up Between Trump and Tesla Ceo Elon Musk.

In my column today I look at wall street’s remarkable recovery from the post-‘Liberation day ‘depths of despair. The headwinds haven’t gone away, but the ‘hopium’ rally could still have room to run. More on that below, but first, a roundup of the main market movies.

If you have more time to read, here are a less articles I recommend to help you make sense of what happy in markets today.

1. Trump Threatens Musk’s Government Deals as Feud Explodes Over Tax-Cut Bill

2. US stocks heal from tariff pain but trade news to keep markets edgy

3. Franc Leading Swiss Back to Deflation Vortex, Asset Stockpiling: Mike Dolan

4. Big Central Banks’ Forecasting Lens Gets Fogged by Us Tarifs

5. The world’s auto supply chain is in the hands of a less chinese bureaucrats

* Tesla Shares Sink 14% After Trump Lashes out Musk, Escalating a Public Spat Between The Two. Tesla shares are now down 33% this year.

* The Nasdaq Slides 0.8% and the S & P 500 Falls 0.5%.

* The Dollar Hits A 7-Very Low on An Index Basis. It’s now a whisker from taking out april’s low and plumbing depths not seen in three years.

* Sterling Rises Above $ 1.36 for the first time since February 2022.

* Silver Hits A 13-Year High of $ 36/Oz, and Platinum Jumps Around 5% to a 3-year high of $ 1,145/oz.

Trump-Musk Feud Sinks Stocks

So, The Trump-Xi Call to Defuse Trade Tensions Finally Took Place. The Cynical View would be that it Yielded Nothing Concrete Other than an agreement to keep talking, suggesting china is standing firm and trump may be forced into another major climbdown.

The more optimistic take, which investors initially adopted, is that talks was constructive and cordial, evidenceed by the tone of trump’s social media post and the fact that Two invited.

But that’s pretty thin grue, and it wasn’t enough to support wall street’s initial Gains. After Hitting a Record High for a Second Day, The MSCI all country index ended the session flat.

Investor Sentiment was soured by the latest weekly jobless claims figures, the second warning from the labor market in 24 hours after wedding sector Emploryment report. If these trends are reflected in may’s nonfarm payrolls on Friday, markets count be in for a Rocky ride.

Some of the us economy gloom was offset by EBBED. This bodes well for second Quarter GDP Growth, and the Atlanta Fed’s GDPNOW Model Estimate for Second Quarter Growth was revised up a touch to an annualized 3.8%.

Like the First Quarter GDP Contraction, however, the expected rebound in Q2 is Completely Driven by Pre-Tariff Distorts in the Trade Data.

Meanwhile, The European Central Bank Cut Interest Rates for the Eighth Time Since Last June, by a Quarter Point to 2.00%. President Christine Lagarde Signaled a Pause in the Easing Cycle, Telling Reporters The Bank is in a “Good Position” Good Position “On Monetary Policy Right Now.

But more cuts are likely to come, just a bit later this year than many economists had expected. Rates traders still see 50 bps of easy this year, with 25 bps cuts in September and December.

Lastly, but by no means least, the ‘bromance’ between the world’s most powerful man and its richest erupted into a rancorous public fight, as trump threatened to cute of government content Companies Owned by Musk.

The 14% slump in tesla shares dragged wall street into the red, casting a shadow over world markets going into the final trading day of the week.

Wall street’s ‘hopium’ high not exhausted yet

By any measure, the recent resilience of us stocks is remarkable, with wall street powering through numerous headwinds to erase all its tariff-affected loses and move into positive territory for the means. And Although these headwinds haven’t gone away, the rally may still have some come Juice left in it.

Since the April 7 lows plumbed after us president Donald Trump’s ‘Liberation Day’ Tariff Debacle, The S & P 500 and Nasdaq are up 23% and 32%, responsible. ‘Big tech’ has been the way, with the roundhill ‘magnificent Seven’ ETF Gaining more than 35%.

On the face of it, this is remarkable given that many of the concerns that sparked the crash – elevated us important tarifs, tensions between the World’s Two Largest Economies, And Chaotic and Chaotic and Chaoticic and in the spirituality Out of Washington – Remain in place today.

Equity bulls are essentially better No Economic Downturn; Inflation Won’t spike despite the tariffs; Us tech companies will continue generating strong results; Fiscal Concerns in Washington will moderate; And Perhaps Most Importantly, Trump will continue to back down on his Most Agrassive Tariff Threats – or to use the Acronym De Jour, Investors Are Assuming The ‘Taco’ Taco ‘Taco’ Taco Hollywood.

That’s a lot of stars aligning.

Some of the biggest names in finance are skeptical, particularly Regarding the us fiscal outlook. BridgeWater Founder Ray Dalo and JPMORGAN CEO Jamie Dimon, Both Long-Time Deficit Hawks, this week repeated their warnings that the us debt is unstainable. But these calls have fallen on deaf ears, or equity investors simply think any fiscal fallout will take years to materiaulize.

On the one hand, investors – especially the retail crowd believed to be driving this rally – appear to be overly optimistic. But LOKED At Another Way, Us Equity Investors May Not Be Ignoring Today’s Underling Risks, but simply viewing them less apocalyptically than they did a more months ago. Indeed, the overwhelmingly negative sentiment from earlier this year Paved the way for the recent rebound.

Sentiment Among Institutional Investors Reached Extreme Levels of Bearishness in the wake of ‘Liberation day’, and recesses fears balloned to historically HIGH Levels as Well, Bank of America”s Aprica Fund Manager ‘ Survey Showed.

Meanwhile, may’s survey showed fund managers holding the biggest underweight position in us equities in two years. When sentiment and positioning are that stretched, it does not take Much for prices to snap back in the opposite direction.

If the latest American Association of Individual Investors Survey Survey is Any Guide, The Snap Back in Equites Styl has Room to Run. Pessimism over the short-term outlook for us stocks increase to an “unusually high” 41.9% last week, Above its history average of 31.0% for the 26th time in 28 weeks.

As HSBC’s Multi -sset Strategy Team Noted This Week, it is preachisely because these sentiments and positioning indicators are being kept “thoroughly in check” that market dips new.

It’s also good to remumber that even though wall street has ereed its earrings and valuations are rising back towards their recent highs, us stocks are still taggards this year.

The S & P 500 is up only 1.5% in 2025 thus far, while the msci all count index has jumped ard 6%, Hitting an all-time high on wedding. This sugges there may be room for us outperformance on a relative basis in the coming weeks and months, thoughts, thoughts, of courses, relative Value Metrics Metrics Might Styl Favor Non-Markets.

This does not mean we should expect capital to start flooding back into the us against. International Institutional Investors May Continue to Rethank their allocation to us assets, create a long-term risk to us stocks. But for now, domestic us investors are picking up the slack.

What Cold Move Markets Tomorrow?

* India Interest Rate Decision

* Germany Industrial Production

* Us Non-Afarm Payrolls, Uneprement Rate

Opinions expressed are there that of the author. They do not reflect the views of reuters news, which, under the Trust Principles, is committed to integrity, independence, independence, and freedom from bias.

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