Stock Futures Drop as Trump-Musk Feud Reignites and Trade Tensions Rise

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Stock futures fell Tuesday morning with Dow down 0.1%, S&P 500 down 0.2%, and Nasdaq down 0.3% after hitting record highs Monday
Trump and Elon Musk renewed their public feud over government spending and subsidies, with Tesla stock declining in premarket trading
Trump threatened new tariffs on Japan over rice imports while officials work to finalize narrower trade deals before July 9 deadline
Senate lawmakers worked through the night on Trump’s tax and spending bill, racing to meet July 4 deadline
Markets await Thursday’s jobs report for signs of labor market cooling that could support Federal Reserve rate cuts

Stock markets prepared for a pullback Tuesday morning after hitting record highs the previous day. The retreat came as renewed tensions between President Trump and Tesla CEO Elon Musk weighed on investor sentiment.

Futures tracking the Dow Jones Industrial Average fell 43 points or 0.1% in premarket trading. S&P 500 futures dropped 0.2% after the index closed above 6,200 for the first time Monday. Nasdaq 100 contracts declined 0.3% with Tesla stock sinking as the Musk-Trump dispute escalated.

The public feud between Trump and Musk flared up again overnight on social media. Musk posted on X that he would try to unseat Congress members who pledged to cut government spending before endorsing Trump’s tax bill. Trump responded on Truth Social, calling Musk someone who “may get more subsidy than any human being in history, by far.”

BREAKING: Trump says Elon Musk would go broke and return to South Africa without US government subsidies for his businesses pic.twitter.com/7mXr0R4Pqq
— Larry Madowo (@LarryMadowo) July 1, 2025

Senate Races Against July 4 Deadline

Senate lawmakers worked through the night and into Tuesday morning on amendments to Trump’s tax and spending bill. The rush comes as legislators race to meet the president’s desired July 4 deadline for passage.

One amendment passed with strong bipartisan support struck down the ban on AI regulation by states. The vote represents a setback for tech companies that had supported Trump’s position on the issue.

Trade tensions continued to simmer as Trump threatened new tariffs on Japan. The president said Monday he was preparing to send Japan a letter outlining new tariff rates. He accused the Asian nation of being unwilling to import American rice.

Officials Scale Back Trade Ambitions

US officials have scaled back Trump’s push for comprehensive “reciprocal” trade deals according to Financial Times reporting. Instead, they are working to find narrower agreements before July 9. That date marks when Trump’s sweeping “reciprocal” tariffs are set to resume if no deals are reached.

The dollar continued its slide Tuesday, falling another 0.2% against a basket of rival currencies. The greenback is coming off its worst first-half performance since 1973. Gold prices climbed 1.3% to $3,349 an ounce.

Treasury yields moved lower with the benchmark 10-year note falling 3 basis points to 4.19%. The yield decline reflects growing expectations that the Federal Reserve may cut interest rates sooner than previously anticipated.

Markets are increasingly focused on Thursday’s jobs report for signs of labor market cooling. Any weakness in employment data could strengthen the case for Fed rate cuts. Trading will end early Thursday at 1 p.m. ET due to the July 4 holiday.

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