U.S. Stocks Plunge Amid Trump, Fed Disagreement, Tesla Surges 7%

In the evening, U.S. stocks opened higher but quickly reversed course, leading to a broad sell-off across major indices. The Nasdaq, in particular, saw a significant drop after an initial surge. This market volatility came amidst a flurry of statements from key figures, including U.S. President Donald Trump and several Federal Reserve officials.

Trump, who has been vocal about his views on the U.S. economy, reiterated his stance on inflation and costs. He stated, "Costs are down, no inflation. This is the opposite of what the Federal Reserve and fake news media 'want'!" This statement comes after Trump's repeated calls for the Federal Reserve to lower interest rates, claiming that it would have a positive impact on the U.S. economy. However, Federal Reserve Chairman Jerome Powell has resisted these calls, leading to a public disagreement between the two.

Meanwhile, several Federal Reserve officials expressed their concerns about the economic outlook. Federal Reserve Governor Lael Brainard warned that tariffs could slow down the economy and increase unemployment. She also noted that tariffs could disrupt supply chains and continue to put upward pressure on inflation. Similarly, Federal Reserve Governor Christopher Waller highlighted the risks of both inflation and unemployment rising. New York Fed President John Williams acknowledged the high level of uncertainty in the current economic environment, stating that it would persist for some time. He attributed this uncertainty to structural changes in the global economy, such as advancements in artificial intelligence, deglobalization, and innovations in the financial system.

In the tech sector, Tesla's stock price surged by nearly 7% after reports that Elon Musk's artificial intelligence startup, XAI, was in talks to raise a new round of funding, with a potential valuation of $120 billion. However, this positive news for Tesla did not translate into broader market gains.

Chinese companies listed in the U.S. (often referred to as "Chinese concept stocks") also experienced a volatile session. The Nasdaq Golden Dragon China Index initially rose by about 1%, outperforming the broader Nasdaq, but it quickly reversed course and ended the day in the red. Several Chinese concept stocks, including Douyu and Kingsoft Cloud, saw significant declines, while Manner Coffee and Sina Technology posted gains of over 8% and 3%, respectively.