Stocks Stall as Bond Yields Climb, Tesla Dips, and Tariff Fears Resurface

Markets hit pause Tuesday after a euphoric first-half rally, with stocks wavering, bond yields rising, and the dollar weakening as traders digested strong job data, Jerome Powell’s cautious stance, and President Donald Trump’s intensifying pressure on the Fed and Congress.

Key Takeaways:

S&P 500 and Nasdaq dipped after record-setting highs on Monday.
Bond yields rose amid Powell’s “wait-and-see” tone and stronger-than-expected job openings.
Trump’s $3.3 trillion tax-and-spending bill faced a tense Senate battle.
Tesla stock dropped following renewed criticism from Trump targeting Elon Musk and DOGE.
Investors eye July 9 as a key tariff deadline with major trade partners in tense negotiations.

Stocks: From All-Time Highs to Uncertainty

The S&P 500 slipped 0.29%, while the Nasdaq Composite lost 0.39%, retreating from fresh highs hit Monday. Meanwhile, the Dow Jones Industrial Average managed a 0.4% gain, buoyed by financials and defensive sectors.

Tech names like Tesla, Robinhood, and Wolfspeed were among the session’s biggest movers. Tesla in particular was pressured after Trump took aim at the company’s federal support, saying DOGE should “take a good, hard look” at how much Tesla benefits from government funds.

Rates and the Fed: Powell Holds the Line

Federal Reserve Chair Jerome Powell reiterated that the Fed is not ready to cut rates yet, citing uncertainties over whether tariff-related price hikes could fuel persistent inflation.

“Federal Reserve interest rate policy is likely on hold for now,” said Josh Hirt of Vanguard, who still sees room for two cuts by year-end if labor markets hold steady.

As Powell spoke from Portugal at the ECB forum, 10-year Treasury yields ticked up to 4.25%, recovering from recent lows.

Politics: Trump Battles on Multiple Fronts

Markets are also closely watching Washington, where the Senate is pushing through overnight sessions to finalize Trump’s $3.3 trillion fiscal package. The bill—expected to be voted on by Friday—has become a major flashpoint, with some Republican senators still holding out.

Trump’s Truth Social posts this week again slammed Powell and called for immediate rate cuts. He also hinted at fresh trade tariffs if no deals are struck by July 9, triggering concerns about a potential escalation in global trade tensions.

Currencies and Commodities: Dollar Drops, Gold Shines

The US dollar weakened, with the Bloomberg Dollar Spot Index down 0.1%, hovering near its lowest since 2022. ING analysts say further weakness could come if upcoming data show cooling inflation.

Meanwhile, gold surged 1.4% to $3,348.91/oz, as investors sought hedges against policy and geopolitical risks. WTI crude rose 0.4% to $65.35/bbl amid ongoing Middle East uncertainties.