US stocks retreated sharply on Monday as escalating tariff threats from President Donald Trump unsettled Wall Street ahead of a key Wednesday deadline. The S&P 500 slid 0.9%, while the Dow Jones Industrial Average dropped 526 points (1.2%) and the Nasdaq lost 1% in midday trading.
All 11 sectors of the S&P 500 traded in the red, with tech and consumer stocks leading the decline, while Tesla shares plunged 6.8%, the biggest drop in the index. The selloff came after CEO Elon Musk reignited his feud with Trump by announcing a new political party to oppose the Republican spending bill passed last week, according to AP.
The market mood soured as Trump stepped up pressure on trading partners to strike trade deals before July 10 or face additional tariffs, raising fears of a fresh global trade conflict.
“Just bringing back that meaty topic back into focus, after a strong week last week, has given a little bit of a pause in the market,” said Bill Northey, senior investment director at US Bank Asset Management.
Trump told reporters that his administration would send letters to several foreign governments laying out new tariff rates unless deals were reached by Wednesday. He said the tariffs would not be collected until August 1, though Treasury Secretary Scott Bessent denied that date was a firm deadline.
Tesla tanks as feud escalatesThe Trump–Musk fallout hit Tesla investors hard. Trump blasted Musk on Sunday, saying the billionaire “had gone off the rails.” Analysts warned that the spat could have long-term consequences for Musk’s companies, which rely heavily on federal subsidies.
“With the autonomous future ahead and the AI Revolution in full force, Musk/Tesla do not need to keep poking the bear,” said Dan Ives of Wedbush Securities, warning that Trump could create regulatory or funding roadblocks.
Tesla has already lost 40% since its December 17 peak of $479.76, closing at $289.75, down $26 since Thursday.
Trade clouds loom despite strong jobs reportMonday’s drop followed a strong week where markets hit record highs, buoyed by a better-than-expected US jobs report. But Trump’s renewed tariff rhetoric overshadowed those gains.
On Sunday, he warned of an additional 10% tariff on BRICS nations, including China, India, Russia, and South Africa, after the bloc criticised his trade policies at their Rio de Janeiro summit.
Nomura analysts said the near-term outlook depends on which countries receive tariff notices, the rates proposed, and when enforcement begins.
Last week, Trump struck a trade deal with Vietnam, allowing US goods duty-free access while imposing a 20% levy on Vietnamese exports, down from a previously proposed 46%. Analysts said similar deals could follow for other countries with large trade surpluses.
“The Vietnam deal may be a blueprint for similar countries in the region,” said Jason Pride of Glenmede, AP quoted.
Bond yields up, oil gainsThe 10-year Treasury yield rose to 4.38% from 4.34%, signalling caution among bond investors. Meanwhile, oil prices climbed after OPEC+ agreed to boost production by 548,000 barrels per day in August.
US crude rose 1.2%, and Brent crude gained 1.5%.
Stocks in focus- Molina Healthcare fell 1.3% after lowering profit guidance due to soaring costs.
- UnitedHealth Group had also slashed forecasts in April on cost pressures.
- In M&A, CoreWeave agreed to acquire crypto miner Core Scientific in a $9 billion all-stock deal. Shares in Core Scientific slumped 16.1%, and CoreWeave dipped 2.5%.
- Oracle fell 1.2%, while Chipotle Mexican Grill declined 1.8%.
Global cues and Fed outlookEuropean indices were mostly higher, while Asian markets closed mixed. The week ahead is light on economic data. The Federal Reserve will release minutes of its last policy meeting on Wednesday, with Chair Jerome Powell expected to hold rates steady until the inflation impact of new tariffs becomes clearer.
“The Fed doesn’t want to pre-empt the inflationary effect of these tariffs. It’s a wait-and-watch mode,” one strategist said.
With Wall Street now digesting both political risk and tariff volatility, investors are bracing for a rocky trading week.
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