Stock Market Diverges: Dow Surges, Tesla Tanks, Fed Holds Fire

Nasdaq, S&P 500, Dow Diverge as Tariff Turmoil and Fed Uncertainty Stir Market Dislocation

Trump's Fiscal Blitz Reshapes Market Trajectory as Wall Street Eyes Subsidy Cuts and Trade Rifts

The start of the second half of 2025 has ripped open fault lines across U.S. indices. The S&P 500 (SPX) shed 0.27% to close at 6,188.28, trimming gains from a record-breaking quarter that saw the index rise 10.6%. The Nasdaq Composite (COMP) fell sharply, down 1.01% to 20,164.49, under pressure from tech-driven selling. Meanwhile, the Dow Jones Industrial Average (DJIA) surged 0.88% to 44,484.95, fueled by defensive rotations and strength in old-economy sectors.

Tesla (TSLA) Collapses as Trump Targets Musk’s Subsidies

Tesla Inc. (TSLA) plunged nearly 5% to $302.15 after former President Trump renewed threats to eliminate subsidies for Elon Musk’s companies. The feud—ignited over Trump’s proposed tax megabill—sent Tesla’s stock into its steepest slide since April, mirroring sharp declines in Q2 Model Y sales across Europe. Deliveries in Sweden and Denmark fell over 60% year-on-year, and total global Q2 deliveries are forecast at 395,328 units, down 11% Y/Y, despite production gains to 443,321 vehicles.

Trump’s remarks pushed Musk to retort, "CUT IT ALL," in reference to federal support. The Department of Government Efficiency (DOGE) is now speculated to review billions in subsidies tied to EV credits and aerospace contracts. Investors slashed exposure accordingly.

Fed Caught Between Tariffs and Data as Powell Signals Delay

Federal Reserve Chair Jerome Powell, speaking at the ECB forum in Portugal, admitted the central bank would have already slashed rates were it not for tariffs. The current Fed Funds Rate remains at 4.25%-4.50%, but Goldman Sachs now forecasts three cuts starting September, bringing the terminal rate to 3.00%-3.25% by 2026. Despite inflation behaving as expected, Powell emphasized a “meeting-by-meeting” approach, declining to commit to a July cut.

Job openings hit 7.76 million in May, above expectations and the highest since November 2024. Yet hiring and quits rates hover at decade lows, signaling labor stagnation. Treasury yields responded: the 10-year yield (BX:TMUBMUSD10Y) slid to 4.276%, while 2-year yields dropped to 3.789%, feeding market expectations for easing.

Tech Sector Suffers as AI Protections Struck from Senate Bill

The Senate dropped a key provision protecting Big Tech from state-level AI regulation, delivering a blow to firms like Nvidia (NVDA) and Meta (META). NVDA fell 1%, while broader tech dragged the S&P 500 IT Sector Index down 1.14%. Sweetgreen (SG) also slumped over 3% after a downgrade from TD Cowen, citing weak urban restaurant performance.

Electronic Arts (EA) Eyes Comeback with NCAA Basketball Revival

Electronic Arts (EA) is exploring a return to the NCAA basketball market after more than a decade, following the success of its revived college football franchise. Deutsche Bank noted it could threaten Take-Two Interactive’s (TTWO) NBA 2K franchise. With TTWO still dominant in pro simulation, EA’s pivot toward NIL-driven college gameplay represents a strategic bypass around entrenched competition.

Healthcare Tech Faces Medicare Shock: Tandem (TNDM) and Beta Bionics Sink

The Centers for Medicare and Medicaid Services proposed rule changes that could dramatically reduce reimbursement for insulin pumps and glucose monitors. Tandem Diabetes Care (TNDM), which derives 39% of 2025 revenue from pump sales, plunged 8%, while Beta Bionics lost 5%. Dexcom (DXCM) and Abbott (ABT) were less affected due to product structure. Insulet (PODD) is expected to remain insulated from the change.

Robinhood (HOOD) Surges on Crypto Expansion and Analyst Upgrades

Robinhood (HOOD) rose after launching crypto services in the EU. The stock has soared 158% YTD, turbocharged by Trump’s deregulatory crypto stance. Mizuho and KeyBanc raised their price targets to $99 and $110, respectively. Coinbase (COIN) is up 40%, and MicroStrategy (MSTR) has gained 34% YTD alongside Bitcoin’s 13% rise.

Wolfspeed (WOLF) Rallies on Bankruptcy Plan, Despite Sub-$1 Pricing

Wolfspeed (WOLF) stock surged over 110% despite filing Chapter 11 bankruptcy, as traders welcomed a creditor-backed restructuring to slash $4.6 billion in debt. The company, once a poster child for CHIPS Act funding, is now trading below $1, with operations hampered by delayed federal funding.

Gold Gains Momentum as Yields Drop and Fed Outlook Softens

Gold (GC=F) jumped 1.35% to $3,352.50, approaching April’s record high. Dovish signals from Powell and geopolitical tension continue to support bullion. With rate cuts likely in Q3 and global dislocation rising, safe-haven flows are expected to remain robust.

Market Positioning Shifts: Bank of America Reports Major Equity Outflows

Bank of America clients were net sellers of $1.3 billion in U.S. equities last week—the largest drawdown since mid-April. ETF inflows softened the blow, suggesting rotational hedging as volatility looms. The Cboe Volatility Index (VIX) rose to 16.90, as traders brace for Trump’s July 9 tariff deadline.

Buy/Sell/Hold Verdicts Based on Data

• Buy: Robinhood (HOOD) – Momentum +158% YTD, crypto tailwinds, institutional upgrades.

• Hold: Tesla (TSLA) – Political risk and European slump offset U.S. production strength.

• Sell: Tandem (TNDM) – 39% revenue at risk from Medicare rule overhaul.

• Buy: Gold (GC=F) – Fed dovish pivot + global dislocation = bullish setup.

• Hold: S&P 500 (SPX) – Rich valuations (22.2x forward P/E) offset by strong earnings growth forecast (+14% in 2026).

• Sell: Wolfspeed (WOLF) – Speculative bet post-bankruptcy with severe dilution risk.

This bifurcated market, pulled between Trump’s megabill, Fed policy paralysis, and geopolitical headwinds, leaves few hiding places. Traders are cycling fast—and the indices are no longer moving in unison.

That's TradingNEWS