US stocks inched up on Thursday, with the S&P 500 (GSPC) and Nasdaq Composite (IXIC) both up by 0.04%, while the Dow Jones Industrial Average (DJI) gained 0.15%. The optimism in the market was driven by news of a more positive than expected call between President Trump and Chinese President Xi Jinping, fueling hopes of thawing US-China relations. However, investor sentiment was dampened by an rising public feud between President Trump and Tesla CEO Elon Musk, which caused Tesla's stock to drop significantly.
The market has been fluctuating in recent days, with investors closely watching trade developments and the fallout from Musk and Trump's public spat. The uncertainty surrounding US-China trade talks and corporate conflicts has added volatility to the market.
Market Movers
- Tesla (TSLA): -8.56%: Tesla's stock fell steeply by 8.56% as tensions between CEO Elon Musk and President Trump escalated. Musk’s public criticism of Trump’s tax-and-spending bill, coupled with concerns over the potential loss of EV tax credits, weighed heavily on the stock. Musk’s remarks on social media exacerbated the fallout, leading to the deepening of the dispute and the decline in Tesla’s market value.
- Amazon (AMZN): +1.56%: Amazon shares rose by 1.56% following the announcement of the call between Trump and Xi. With many of Amazon’s products sourced from China, any positive developments in trade talks between the US and China are seen as favorable for the e-commerce giant. Investors are hopeful that improving relations could lead to fewer tariffs and a more favorable environment for Amazon’s supply chain.
- Circle (CRCL): +188.60%: Circle, a stablecoin firm, saw its shares soar by 188.60% on its market debut. The company’s stock exploded higher after opening at $69, hitting a high of $92 amid multiple trading halts. The surge in Circle’s stock reflects growing interest in cryptocurrency and blockchain technology as the market continues to evolve.
- Trump Media & Technology Group (DJT): -3.24%: Shares of Trump Media & Technology Group fell by 3.24% following a new filing for a Bitcoin ETF. While the company continues its push into the crypto space, the news of the filing did little to boost investor confidence, and the stock saw a dip amid broader market sentiment.
Trump-Xi Call Sparks Hope for Trade Breakthrough
Investor sentiment improved slightly after Chinese state media reported that President Trump and President Xi Jinping spoke on Thursday at Trump’s request. The conversation, which lasted approximately an hour and a half, was described as having a "very positive conclusion" for both countries. This news raised hopes that the US and China might be moving closer to a long-term trade agreement, which would alleviate some of the uncertainty surrounding the ongoing trade war.
The conversation comes at a critical time, as the US and China have faced tensions over issues like tariffs, rare earth minerals, and trade imbalances. The phone call’s positive tone has sparked optimism that both leaders could be working toward a more stable economic relationship. However, while the call itself was encouraging, many investors remain cautious until concrete results emerge from follow-up meetings between trade teams from both countries.
Musk vs. Trump
Tesla's stock took a significant hit on Thursday after the public fallout between President Trump and Tesla CEO Elon Musk intensified. Musk, who has been critical of Trump’s large tax-and-spending bill working its way through Congress, faced a response from Trump, who expressed disappointment in Musk’s stance. This led to a public back-and-forth between the two, with Musk accusing Trump of ingratitude for the political support Tesla received.
The spat between Musk and Trump added to market uncertainty, particularly for Tesla, which has become a major player in the electric vehicle industry. The potential loss of EV tax credits, a key part of Tesla's financial model, only added to concerns over the company’s future prospects. As a result, Tesla’s stock saw significant declines, reflecting investor unease over the growing tension between Musk and the Trump administration.
Looking Ahead
As investors digest the fallout from the Musk-Trump feud and the positive developments from the Trump-Xi call, attention will turn to upcoming economic data. Friday’s May jobs report will be closely watched for signs of how the US labor market is performing amidst the ongoing trade uncertainty and rising inflation pressures. Additionally, the market will remain vigilant on the US-China trade front, with any further updates from the leaders or their trade teams potentially causing significant market movements.
In the short term, market volatility is likely to continue as investors navigate geopolitical tensions and corporate conflicts. The Trump-Xi phone call offers some hope for resolution in US-China trade relations, but any substantive changes will take time to materialize. For now, traders will need to stay focused on economic data and corporate earnings as the broader market wrestles with these uncertainties.