Wall Street indexes closed lower on Thursday, as Tesla’s sharp decline weighed on market sentiment, despite positive news regarding U.S.-China trade talks. The electric carmaker’s shares plunged over 9% after a public dispute between CEO Elon Musk and President Donald Trump intensified, overshadowing the earlier optimism surrounding tariff discussions between the U.S. and China.
Tesla’s Slump Weighs on Market Sentiment
Tesla (TSLA.O) experienced a significant drop, falling more than 9% in heavy trading. This marked the fourth decline in the last five sessions, as CEO Elon Musk’s criticisms of Trump’s tax legislation intensified. Musk has criticized the massive tax overhaul, claiming it negatively impacts electric vehicle tax benefits, which has led to friction with the president. Despite the significant hit to Tesla’s stock, some analysts, such as Mark Spiegel, portfolio manager at Stanphyl Capital, downplayed the broader impact on the market, stating that while Tesla’s decline affected the indexes slightly, it does not represent a systemic issue for the market as a whole.
U.S.-China Trade Talks Show Progress
On the positive side, there was some optimism surrounding U.S. President Trump and Chinese President Xi Jinping’s phone call, during which both leaders extended invitations for future visits to their respective countries. The discussions highlighted ongoing efforts to stabilize trade relations, despite recent tensions over critical minerals that could potentially disrupt the fragile truce between the two largest economies. Experts like Julien Lafargue, Chief Market Strategist at Barclays Private Bank, urged caution, suggesting that market stability will depend on the outcomes of a formal trade agreement rather than diplomatic gestures.
Market Reaction to Economic Data
The broader market also faced pressure from weaker-than-expected economic data. The U.S. private payrolls and services sector data for Wednesday raised concerns about a potential slowdown in the economy due to trade uncertainty. Additionally, new claims for unemployment benefits saw an increase for the second consecutive week, suggesting some softness in the labor market. Investors are now awaiting Friday’s nonfarm payrolls report for a clearer picture of the labor market and overall economic health.
Federal Reserve’s Approach to Interest Rates
The Federal Reserve is expected to maintain its current interest rate range in its upcoming policy meeting, with many analysts predicting no immediate changes. Despite ongoing pressure from President Trump to lower rates, Fed Chair Jerome Powell has opted to wait for more data before making any policy shifts. The uncertainty surrounding tariffs and trade policies remains a key factor influencing the Fed’s decision-making process.
Stocks to Watch
Several stocks also drew attention on Thursday. Brown-Forman (BFb.N), the maker of Jack Daniel’s, saw its shares fall nearly 17% after it forecasted a decline in annual revenue and profit. Meanwhile, Procter & Gamble (PG.N) announced plans to cut 7,000 jobs, or approximately 6% of its workforce, as part of a broader restructuring initiative, sending its stock down by 1.9%.
Market Summary
On the NYSE, advancing issues outnumbered decliners by a ratio of 1.47-to-1, with 220 new highs and 42 new lows recorded. The Nasdaq also saw more advancers than decliners, with a ratio of 1.02-to-1. The S&P 500 saw 16 new 52-week highs and three new lows, while the Nasdaq Composite recorded 50 new highs and 30 new lows.
