Trump vs Musk: can’t live with or without each other
Trees don’t grow to the sky – a truth clearly demonstrated by Tuesday’s trading. After two consecutive days of record highs for the S&P 500 and seven straight sessions of gains for the NASDAQ Composite, the market simply needed a breather. That is precisely what it got on Tuesday. Still, there were no clear triggers for a serious correction – investors merely seized the first convenient excuse to slow things down.
That excuse came in the form of yet another public clash between Elon Musk and President Trump. On the back of this, Tesla (TSLA) shares came under heavy selling pressure – for the 101st time – shedding more than 5% for the day (-5.34%) and ranking among the worst performers in the S&P 500. In their latest spat, Musk intensified his criticism of the president’s tax and spending bill, while Trump responded by suggesting that the Government Efficiency Department – previously headed by Musk himself – should reconsider the allocation of federal grants to Tesla and SpaceX. This raised concern among investors: renewed tensions between Musk and Trump could hinder Tesla’s progress on its autonomous driving project.
And if it were only about Tesla, that would be one thing. But the company’s weight is so great that the fallout from the conflict echoed across the entire big tech sector, putting almost the entire market under pressure from the bears. This was no full-scale sell-off, but the sour mood lingered, and the market reacted accordingly. The NASDAQ Composite posted the steepest decline, falling 0.82%. The S&P 500 – the main benchmark of the U.S. market – got off lightly, dipping a mere 0.11%.
The one bright spot on Tuesday was the Dow Jones (DJIA-30), which ended the day with a solid gain of nearly 1% (+0.91%). This was thanks to a trio of heavyweights: two companies from the healthcare sector – insurance giant UnitedHealth Group Inc. (UNH) and pharmaceutical titan Amgen (AMGN) – and Sherwin-Williams Co. (SHW), an industrial company specialising in paints and wood products. All three stocks are high-priced and saw confident gains of 3-4%, which had a notable impact on the Dow Jones, where the index is calculated as a simple average rather than a weighted one. As a result, the index delivered an impressive performance. Just a bit more – and the old Dow could also be hitting record highs, following its younger siblings, the S&P 500 and NASDAQ.
Indexes in the ITS family also posted slight losses, pulling back from recent highs. The global ITS World Index (ITSW) slipped 0.27%, while the Islamic index ITS Shariah (ITSS) lost a bit more – down 0.61%.
Notably, the top performers in the ITSS index on Tuesday were leading pharmaceutical companies – Merck & Co Inc. (MRK), AbbVie (ABBV), and AstraZeneca (AZN). More broadly, healthcare and pharmaceutical stocks held up well. The Healthcare sector was among the day’s top performers, second only to Basic Materials. These were the only two sectors where average daily gains exceeded 1%: +1.4% for materials and +1.06% for healthcare.
That is a positive signal, as healthcare stocks have lagged in recent months. Over the past quarter, they were among the few to finish in the red, with an average decline of 3.6%. Only oil and gas companies fared worse, with losses exceeding 5% (-5.4%). Now, it seems healthcare stocks may be starting to recover lost ground.
Overall, Tuesday was a fairly typical day. A pause after setting new highs was expected – and it fits neatly into the market’s broader narrative.
Market outlook for 2 July 2025
Wednesday, as expected, promises to be tense and far from straightforward. However, that does not mean the day should be seen in a gloomy light. Quite the opposite. Despite a degree of caution among market participants, there are still clear skies of hope on the investment horizon – the kind that could bring a continuation of the upward trend and fresh record highs for the leading indexes.
The main hopes for the day are centred around Donald Trump’s so-called “One Big Beautiful Bill”, which narrowly passed the Senate yesterday and is now heading to the House of Representatives for final approval. The deadline is fast approaching – 4 July – but as that is a public holiday, there is a strong likelihood the bill will be passed today. That is precisely what investors are hoping for.
In addition, many are looking forward to encouraging labour market data, with the ADP report on new private sector jobs in June due for release today. Analysts’ forecasts are fairly upbeat, expecting 99,000 new jobs – a sharp increase from just 37,000 in May. That said, analysts are often wide of the mark in this area, so surprises cannot be ruled out.
Another positive development lies in the technical picture: yesterday’s trading produced a strong buy signal on the charts of both the S&P 500 and the NASDAQ Composite – the so-called “Golden Cross”. Many investors may interpret this as a clear signal to start buying. The hope is that the signal will prove reliable and that a wave of new buyers will provide much-needed support to the market.
Looking at developments so far today, the picture can be described as moderately positive. In Asia, the mood is mixed: Shanghai is flat, Hong Kong is up, while Japan and India are showing modest declines. European markets, by contrast, are looking more upbeat – trading broadly in the green with average gains of between 0.3% and 0.8%.
Futures for the major U.S. indexes are also showing modest gains, each up by a few tenths of a percent. Still, the real action is expected later in the day – following the release of U.S. labour market data at 17:15 Astana time. Attention will then turn to the House vote on the “Big Bill”, which market participants will be watching with particular interest.
And if everything aligns as hoped, we could well see new all-time highs by the close. The chances of such a scenario playing out are looking fairly strong.