Markets Mixed as Dow Gains, but Tesla Falls Amid Musk-Trump Feud Over Tax Bill

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U.S. equities ended Tuesday on a divided note, as the Dow Jones Industrial Average posted strong gains while tech-heavy indexes slipped. The standout story of the day was

The Dow rose 400.29 points, or 0.91%, to close at 44,495.10, buoyed by strength in industrials and broad optimism following Senate passage of the administration’s fiscal legislation. The Russell 2000 gained 1.03%. However, the S&P 500 edged lower by 6.90 points, or 0.11%, to 6,198.05, and the Nasdaq Composite dropped 166.85 points, or 0.82%, to 20,202.9.

Tesla shares closed at $300.71, down $16.95, or 5.34%, making it one of the worst-performing large-cap stocks of the day. The drop followed a sharp exchange between Musk and Trump that analysts said could signal more regulatory friction ahead.

In a scathing Truth Social post late Monday, President Trump declared that Musk “may get more subsidy than any human being in history, by far,” and suggested that “without the government support, Elon would probably have to close up shop and head back to South Africa.” Trump went further, hinting at increased scrutiny over funding sources for Tesla and SpaceX: “BIG MONEY TO BE SAVED!!!”.

The feud comes amid Musk’s public opposition to the administration’s newly passed budget bill. According to a note from Wedbush Securities, the Musk-Trump dispute has become a “soap opera” and “remains an overhang on Tesla's stock,” with investors concerned that the once-close relationship may now turn adversarial. The firm warned that “being on Trump’s bad side will not turn out well,” particularly as Tesla faces a critical period for regulatory approvals tied to its autonomous vehicle initiatives, including Robotaxis and Cybercabs.

Despite the turmoil, Wedbush maintained its Outperform rating on Tesla with a 12-month price target of $500.

The broader political backdrop was equally charged. The Senate on Tuesday passed a $3.3 trillion tax and spending bill by a 51–50 margin, with Vice President JD Vance casting the tie-breaking vote. The bill includes $4.5 trillion in tax cuts and $1.2 trillion in spending reductions. It now moves to the House, where internal Republican divisions could pose a challenge.

“This was a team effort,” said Senate Majority Leader John Thune. “In the end, we got the job done.”

President Trump celebrated the bill's passage, calling it “ONE, BIG, BEAUTIFUL BILL” and stating that it would deliver “Permanently Lower Taxes, Higher Wages and Take Home Pay, Secure Borders, and a Stronger and More Powerful Military.” Trump also promised that social safety net programs like Medicaid, Medicare, and Social Security would be “STRENGTHENED and PROTECTED” by cutting waste and fraud.

But not all Republicans were aligned. Senator Rand Paul publicly opposed the bill, writing on X that he had offered to support the legislation in exchange for “a 90% reduction in the debt ceiling,” but was rejected. “I wasn’t horse-trading. I was fighting for the American people and against our out-of-control debt,” Paul said. “Bottom line: I offered my vote for fiscal sanity. Congress chose to sell out taxpayers instead”.

Meanwhile, investors kept an eye on monetary policy developments abroad. At the European Central Bank’s annual Sintra Forum, Federal Reserve Chair Jerome Powell reiterated that the Fed remains in a “modestly restrictive” posture and left the door open to a rate cut this year. “I wouldn't take any meeting off the table,” Powell said, adding that decisions “will depend on data”.

Commodities rose modestly, with August gold futures settling at $3,350.40, up 1.29%, and crude oil rising 0.88% to $65.68, reflecting measured optimism amid geopolitical uncertainty.

Manufacturing data added to the day’s murky economic picture. The ISM Manufacturing Index rose slightly to 49.0, still signaling contraction. Components like New Orders and Employment weakened further, while Prices Paid surged to 69.7—highlighting persistent inflation pressures. Tariffs were cited as a major concern, with one manufacturer stating, “The tariff mess has utterly stopped sales globally and domestically. Everyone is on pause”.