11 hours ago
3
By Stan Choe
July 2, 2025 — 5.19am
US stocks are drifting in mixed trading as Wall Street’s momentum slows after setting record highs in each of the last two days.
The S&P 500 rose 0.1 per cent in afternoon trading. The Dow Jones was up by 452 points, or 1 per cent, and the Nasdaq composite was 0.5 per cent lower.
Wall Street’s recent rally has lost momentum this week. Credit: AP
The Australian sharemarket is set for gains, with futures at 4.58am AEST pointing to a rise of 25 points, or 0.3 per cent, at the open. The ASX was flat on Tuesday. The Australian dollar lost ground. It was 0.1 per cent lower at 65.74 US cents at 5.17am.
Tesla tugged on the market as the relationship between its CEO, Elon Musk, and President Donald Trump soured even further. Once allies, the two have clashed recently, and Trump suggested there’s potentially “BIG MONEY TO BE SAVED” by scrutinising subsidies, contracts or other government spending going to Musk’s companies.
Tesla fell 5.6 per cent and was one of the heaviest weights on the S&P 500. It had already dropped a little more than 21 per cent for the year so far coming into the day, in part because of Musk’s and Trump’s feud.
Loading
Drops for several darlings of the artificial-intelligence frenzy also weighed on the market. Nvidia’s decline of 2.1 per cent was the heaviest weight on the S&P 500.
More stocks were rising within the index than falling, led by several casino companies. They rallied following a report showing better-than-expected growth in overall gaming revenue in Macao, China’s casino hub. Wynn Resorts climbed 8.8 per cent, and Las Vegas Sands gained 8.9 per cent.
Automakers outside of Tesla were also strong, with General Motors up 4.7 per cent and Ford Motor up 3.9 per cent.
The overall US stock market has made a stunning recovery from its springtime sell-off of roughly 20 per cent. But challenges still lay ahead for Wall Street, with one of the largest being the continued threat of Trump’s tariffs.
Many of Trump’s stiff proposed taxes on imports are currently on pause, but they’re scheduled to kick into effect in about a week. Depending on how big they are, they could hurt the economy and worsen inflation.
Congress is also debating proposed cuts to tax rates and other measures that could send the US government’s debt spiralling higher, which could push inflation upward. That in turn could mean higher interest rates, which would hurt prices for bonds, stocks and other investments.
Despite such challenges, strategists at Barclays say they’re seeing signals of euphoria emerging among some investors. The strategists say a measure that tries to show how much “excess optimism” is in the market is not far from the peaks seen during the “meme stock” craze that sent GameStop to market-bending heights or to the dot-com bubble at the turn of the millennium.
Other signals are also indicating exuberance in the market, such as demand for what are known as “blank-check companies” that hunt for privately held companies to buy. When too much optimism is in the market, it can inflate stock prices to too-high levels in what’s called a “bubble.”
Of course, “market bubbles are infamously difficult to predict and can endure far longer than anticipated before correcting,” according to the Barclays strategists led by Stefano Pascale and Anshul Gupta.
In the bond market, Treasury yields rose following some mixed reports on the US economy.
Musk and Trump’s relationship continues to sour.Credit: AP
One said US employers were advertising more job openings at the end of May than the month before and than economists expected. That could be an encouraging signal for a job market that had been appearing to settle into a low-hire, low-fire state.
Separate reports on US manufacturing were more mixed. One from the Institute for Supply Management said US manufacturing activity shrank again in June, but not by as much as the month before.
“Customers do not want to make commitments in the wake of massive tariff uncertainty,” one survey respondent in the fabricated metal products industry said.
Loading
A separate report from S&P Global suggested manufacturing production returned to growth in June after three months of declines.
The yield on the 10-year Treasury rose to 4.25 per cent from 4.24 per cent late Monday after erasing an earlier, modest loss from the morning.
The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do with its main interest rate, rose more sharply to 3.78 per cent from 3.72 per cent. Better-than-expected data on the economy could give the Fed more reason to stay on pause with interest rates, after it halted its cuts to rates at the start of this year.
Fed Chair Jerome Powell said again on Tuesday that he wants to wait for more evidence about how much Trump’s tariffs will affect the economy and inflation before resuming cuts to interest rates. That’s despite Trump’s angry insistence lately that Powell and the Fed act more quickly to give the economy a boost through lower rates.
In stock markets abroad, indexes were mixed in Europe and Asia.
Japan’s Nikkei 225 fell 1.2 per cent, and South Korea’s Kospi rose 0.6 per cent for two of the larger moves.
AP
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
Most Viewed in Business
Loading
