Wall Street took a sharp downturn Friday as a high-profile feud between former President Donald Trump and billionaire entrepreneur Elon Musk sent Tesla shares into a tailspin — and rippled across the broader market.
The S&P 500 fell 1.3%, the Dow Jones Industrial Average dropped 395 points, or 1.1%, and the tech-heavy Nasdaq sank 2.1%, weighed heavily by a stunning 14% plunge in Tesla stock. The electric vehicle giant lost over $110 billion in market value in a single session — its worst day since the COVID crash of March 2020.
What Happened?
The slide comes after a public clash escalated between Trump and Musk, who were once considered uneasy allies. The former president lashed out at Musk on his Truth Social platform late Thursday, accusing the Tesla and SpaceX CEO of being “unpatriotic,” “arrogant,” and “bad for American jobs.”
Trump’s comments followed Musk’s sharp criticism of Trump’s recently proposed tariffs on Chinese electric vehicles and components, which Musk said would “hurt American innovation more than it protects American labor.”
Musk also hinted that he may consider moving some of Tesla’s manufacturing out of the U.S. if what he called “economic isolationism” continues. That comment was widely interpreted as a thinly veiled threat — and rattled investors already nervous about trade policy volatility.
Investor Reaction
“This is more than just a celebrity spat — it’s a potential policy problem,” said Amanda Fischer, chief market strategist at Beacon Ridge Capital. “Musk is one of the most influential industrialists in the world, and Trump is the Republican frontrunner. If this feud turns into real policy retaliation, the market will have to price in the risk.”
Tesla’s drop also dragged down suppliers and clean-energy stocks. Rivian and Lucid Motors were each down more than 6%, while battery manufacturers Enphase Energy and QuantumScape slid over 4%. The electric vehicle sector overall lost an estimated $170 billion in market capitalization today alone.
Political and Economic Implications
Trump’s attack appears to be part of a broader push to reassert his influence over corporate America as the 2024 presidential campaign intensifies. Musk, who has recently taken a more centrist public stance, has not endorsed any candidate.
The White House declined to comment on the feud, but several Senate Republicans came to Musk’s defense, calling Tesla “a national asset” and urging Trump to “tone it down.” Meanwhile, Democratic lawmakers seized on the drama to highlight the risks of “erratic policy posturing” under a potential second Trump administration.
Broader Market Outlook
While the feud dominated headlines, other factors also contributed to the market’s decline. The latest U.S. jobs report showed stronger-than-expected hiring, prompting fears that the Federal Reserve may keep interest rates higher for longer. Bond yields ticked up, and the dollar strengthened — both of which typically pressure equities.
Analysts say investors should brace for more volatility ahead.
“With politics, rates, and global supply chains all in play, the second half of the year is shaping up to be rocky,” said Michael Sung, a portfolio manager at Bayview Capital. “Today may be a preview of what’s to come if business leaders and policymakers can’t find some common ground.”
Looking Ahead
Tesla is set to hold its annual shareholder meeting next week, and all eyes will be on whether Musk addresses the clash publicly — or attempts to de-escalate. Meanwhile, Trump is expected to double down on his “America First 2.0” agenda in a weekend rally in Pennsylvania. For now, markets are on edge — and watching closely.
Reporting by Katy Moore.
