Dow Jones Plummets: Trump's Tariff Deadline Looms, Tesla Slides as Musk Launches Political Party

Market Movements and Key Developments

On Monday morning, Dow Jones futures experienced a slight decline, alongside S&P 500 and Nasdaq futures. President Donald Trump announced plans to send tariff letters to a dozen countries on the same day, though the new rates will not take effect immediately. Meanwhile, Elon Musk is in the process of forming a new political party after opposing Trump's tax-and-spending package, which has led to Tesla losing significant tax credits.

The stock market saw a strong rally during a holiday-shortened week, with the S&P 500 and Nasdaq reaching new record highs, while the Dow Jones came close to achieving all-time levels. The video from Investors.com highlights how the Nasdaq and S&P 500 strengthened following jobs data, with stocks like ServiceNow, URBN, and LPLA gaining attention.

Tesla stock faced a sharp drop early Monday due to Musk's political move, with shares declining slightly since the June 22 robotaxi launch. In contrast, Uber and Mobileye have been major winners, with Uber stock breaking out on Thursday. Stocks such as Cadence Design Systems, Nextracker, ServiceNow, and Shopify are also considered strong buy candidates.

Delta Air Lines is set to report earnings on July 10, marking the start of Q2 results for airlines. Additionally, on Thursday, Taiwan Semiconductor will release June and Q2 sales figures, which are crucial for customers like Nvidia, Broadcom, and Apple.

Market Performance and Economic Indicators

Dow Jones futures fell slightly compared to fair value, while S&P 500 futures dropped 0.3% and Nasdaq futures lost 0.4%. The 10-year Treasury yield edged up to 4.36%, and crude oil remained relatively flat. OPEC+ announced an increase in oil output for August, marking the fourth consecutive monthly rise and exceeding expectations.

It’s important to note that overnight movements in Dow futures and other indices may not directly translate into actual trading during the next regular stock market session.

Tariff Deadlines and Trade Implications

President Trump signed his large tax-and-spending package into law on July 4 but quickly shifted focus to tariffs. He stated that he would send out "probably 12" letters to countries on Monday, outlining additional tariffs that would take effect on August 1. Trump mentioned sending dozens of letters by July 9, the end of a 90-day pause for his "Liberation Day" tariffs.

Key trade partners, including Japan, the European Union, South Korea, and India, are working to reach preliminary understandings with the U.S. to minimize potential tariff impacts. Treasury Secretary Scott Bessent warned that countries failing to reach deals by August 1 could face full "Liberation Day" tariffs.

While July 9 is a key deadline, new tariff hikes would come into effect over the following weeks.

Stock Market Rally and Recent Gains

The stock market rally was short but impactful, with the S&P 500 and Nasdaq continuing their upward trend, while the Dow Jones finished within 1% of all-time levels. The Russell 2000 finally cleared its 200-day line, signaling positive momentum. A U.S.-Vietnam trade deal and the June jobs report contributed to the positive sentiment.

The Dow Jones Industrial Average rose 2.3% in the last week of trading, the S&P 500 climbed 1.7%, and the Nasdaq composite advanced 1.6%. The small-cap Russell 2000 jumped 3.5%, and the 10-year Treasury yield increased by nearly six basis points to 4.34%.

U.S. crude oil futures rose 2.3% to $67 per barrel.

ETF Performance and Investment Opportunities

Among growth ETFs, the Innovator IBD 50 ETF jumped 2.45% for the week, with the iShares Expanded Tech-Software Sector ETF gaining 3.2%. The VanEck Vectors Semiconductor ETF advanced 1.9%, hitting new highs. Taiwan Semiconductor stock is a major holding in the semiconductor ETF, along with Nvidia and Broadcom.

The ARK Innovation ETF climbed 1.8% for the week, reaching a three-year high. Tesla stock remains the top holding across ARK Invest’s ETFs. Other notable ETFs include the SPDR S&P Metals & Mining ETF, which surged 5.6%, and the U.S. Global Jets ETF, gaining 5.3%.

Elon Musk's Political Move and Its Impact

Elon Musk announced the formation of an "America Party" as an alternative to the Republican and Democratic parties. This move has sparked conflict with President Trump, who criticized Musk for going "off the rails." Musk’s disagreement with Trump centers around the budget, which he claims will significantly increase federal debt.

The recently passed legislation ends the $7,500 U.S. EV tax credit after September 30 and eliminates zero emission credits, which could impact Tesla’s sales and profitability. However, there may be a pull-forward in U.S. demand in the third quarter.

Tesla's Stock Performance and Challenges

Tesla stock experienced a sharp decline early Monday, with shares falling 2.6% to $315.35. The stock has been trading between the 200-day and 50-day lines. While Tesla deliveries in Q2 were better than expected, they still declined by 13.5% year-over-year. The Optimus robot faces production delays and leadership changes.

Since the limited robotaxi launch in Austin, Texas, on June 22, Tesla stock has fallen 2.1%. In contrast, Uber stock has risen 11.8% to $93.63, clearing an early entry point and breaking out on Thursday. Mobileye stock has surged 29.6%, with the driver-assist systems maker clearing an early entry point.

Stocks in Buy Zones and Investment Strategies

Cadence Design Systems stock rallied 7.1% to $326.81 for the week, with shares popping 5.1% on Thursday. Nextracker stock soared 13.7% to $66.31, surging from the 50-day line. Shopify stock rose 2.5% to $116.52, moving within a buy zone. ServiceNow stock gained 3.5% on Thursday, briefly surpassing a key buy point.

Investors are advised to focus on watchlists and look for new setups, rather than chasing extended stocks. Names like Cadence Design, Nextracker, Shopify, and Uber are in position, but many others are overbought.

Recommended Stocks and Resources

Nvidia and Broadcom stock are featured on the IBD Leaderboard, while Shopify, ServiceNow, and Broadcom appear on the SwingTrader list. Nvidia, Shopify, and Taiwan Semiconductor stock are included on the IBD 50. Nextracker stock is on the IPO Leaders list, and Nvidia is highlighted on the IBD Sector Leaders.

For further insights, readers are encouraged to follow Ed Carson on social media for stock market updates. Additional resources, such as the IBD Digital platform, provide premium stock lists, tools, and analysis. Understanding average true range can help investors avoid excessive swings in growth stocks.