S&P 500 Falls from Record High as Tesla Stock Tumbles Amid Trade Tensions and Musk's Political Ambitions

The S&P 500 fell 0.8% on Monday, with Tesla leading the decline after CEO Elon Musk discussed forming a new political party. Research analysts raised price targets for DoorDash and Uber, leading to gains in those stocks. Major US indexes dropped as trade policy returned to the forefront, with President Trump threatening tariffs on Japan and South Korea.

The S&P 500 fell 0.8% on Monday, with Tesla leading the decline after CEO Elon Musk discussed forming a new political party. Musk's announcement, which he made on Saturday, has sparked a wave of concern among investors. Tesla's stock (TSLA) dropped by as much as 7.6% in premarket trading before recovering slightly to a 6.5% loss by 7:48 a.m. ET [1].

Musk's decision to launch a new political party has drawn a strong reaction from President Donald Trump, who called the move "ridiculous" and warned that it would sow confusion [1]. The political feud between Musk and Trump has raised concerns among investors about potential cuts to US government EV subsidies and Musk's potential distraction from Tesla's core business [1].

Tesla's recent struggles include a record fall in second-quarter sales, with the company reporting a 13.5% decline in vehicle sales compared to the same period in 2024. The company also reported its first-ever annual decline in sales as a public company, marking a significant turnaround for an automaker historically known for robust sales growth [1].

The political turmoil has weighed heavily on Tesla's stock, with the company's shares having shed almost 23% of their value so far this year. Musk's latest move has also raised questions about the Tesla board's course of action, as the company's shares and its future are seen as inextricably tied to Musk's personal and political ambitions [2].

Meanwhile, major US indexes dropped as trade policy returned to the forefront. President Trump threatened to slap additional tariffs on Japan and South Korea, warning the countries against retaliation. The tariffs, set to take effect on August 1, 2025, are part of Trump's ongoing efforts to address trade deficits [3].

Research analysts have raised price targets for DoorDash and Uber, leading to gains in those stocks. The positive outlook for these companies may have been driven by their strong performance during the ongoing economic uncertainty and their ability to adapt to changing consumer behaviors.

References:
[1] https://www.cnn.com/2025/07/07/business/tesla-stock-musk-trump-intl
[2] https://www.aljazeera.com/economy/2025/7/7/tesla-shares-tumble-as-elon-musk-floats-new-us-political-party
[3] https://www.irishstar.com/news/us-news/breaking-trump-slaps-japan-south-35515902