Stock Market News Review: Markets Fall amid Trump-Musk Feud, Rising Jobless Claims

Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) fell lower on Thursday as the feud between Tesla (TSLA) CEO Elon Musk and President Donald Trump ramps up alongside rising initial jobless claims.

Musk’s relationship with Trump has plunged to an all-time low. TSLA stock closed Thursday with a 14.26% loss after Musk continued his criticism of Trump’s tax and spending bill, previously characterizing it as a “disgusting abomination.” Trump responded by saying that the U.S. would save billions if it were to “terminate Elon’s Governmental Subsidies and Contracts.”

Later on, Musk announced in an X post that SpaceX would immediately decommission its Dragon spacecraft as a result of Trump’s subsidy cancellation statement. TSLA has fallen an additional 2% in after-hours trading and is a major component of both the S&P 500 and Nasdaq 100.

Meanwhile, Americans filing for initial unemployment benefits are on the rise. For the week ended May 31, initial jobless claims tallied in at 247,000, above the estimate for 235,000 and marking the highest level since October as uncertainty in the labor market begins to show.

Pivoting to trade news, the U.S. goods trade deficit for April plunged by 55% to month-over-month to $61.6 billion as the effects of tariffs start to materialize. Within that figure, goods imports from China fell to $28.3 billion, the lowest since April 2020. Exports grew by 3% to $289.4 billion. This is ultimately a positive for gross domestic product (GDP), as imports are subtracted from the GDP calculation while exports are added.

In tariff news, President Trump held a phone call with Chinese President Xi Jinping this morning, resulting in a “very positive conclusion for both countries” along with plans for another round of U.S.-China trade talks, said Trump on Truth Social. “There should no longer be any questions respecting the complexity of Rare Earth products,” added Trump, likely a reference to accusations that China was restricting the flow of critical minerals used in semiconductors and cars.

Furthermore, Kansas City Fed Bank President Jeff Schmid said on Thursday that he expects tariffs to impact prices in the coming months, although the exact extent is unclear. With uncertainty in the air, it’s likely that the Federal Open Market Committee (FOMC) will choose to keep rates steady at the next meeting on June 17 and 18. The CME FedWatch tool agrees, pricing in a 97.4% chance that rates will remain unchanged.

The S&P 500 closed down by 0.53% while the Nasdaq 100 finished lower by 0.80%.