Markets tumbled at the start of the week as investors grappled with a mounting trade showdown and further turbulence in Tesla’s stock. The S&P 500 fell around 0.8%, stepping off its recent high, while the Nasdaq and Dow each slipped nearly 0.9%. It was a sharp reminder that market optimism can vanish in an instant when geopolitics and headline news collide.
At the heart of Monday’s selloff was a resurgence of U.S. trade tensions. President Trump announced via letter and social media that tariffs of 25 percent on Japanese and South Korean imports would be implemented on August 1 unless new agreements were reached. Several other nations could face duties of up to 40 percent . Asian markets barely blinked—with Tokyo and Seoul even gaining—in response, a sign of investor skepticism that the tariffs would materialize or significantly impact trade.
However, Wall Street wasn’t so sanguine. The Trump tariff threat, amplified by renewed jitters about inflation and rate policy, triggered a broad-based “risk-off” mood . Every S&P 500 sector dipped, with consumer discretionary and energy among the hardest hit . The bond markets reflected those worries too, with Treasury yields edging higher—a signal that investors are bracing for slower growth ahead.
Tesla bore the brunt of the correction in large part due to Elon Musk’s weekend announcement that he would form a new third-party called the “America Party,” intensifying his conflict with Trump . Tesla shares dropped 6.8 percent—the biggest loss of any S&P 500 stock . Analysts at William Blair downgraded the stock, citing both Musk’s political distractions and the loss of the $7,500 U.S. EV tax credit under the new budget . Over the course of 2025, Tesla has now shed approximately 27 percent .
Beyond the headlines around Musk, the energy and renewable sectors also took pain. First Solar slipped about 4.3 percent on Monday, relinquishing some of its gains after news that the final budget removed a planned wind and solar tax — but kept in place key phase-outs of residential solar credits. Earlier reports had warned of diminished tax credit support for solar installations, and U.S. trade restrictions were already hurting First Solar's margins .
Meanwhile, Baxter International fell roughly 4.3 percent following the announcement that Andrew Hider, from ATS Corp., will become the company’s new CEO by September . Analysts at Citigroup deemed the appointment a promising next phase for Baxter post-restructuring, while UBS and Bank of America took a more measured view given uncertainties around strategic direction .
Amid the selling, some names shone through on the long side. Tractor Supply soared nearly 3.9 percent, buoyed by anticipation of a strong upcoming earnings report due July 24. The company benefits from resilient demand in rural markets for home and garden supplies. DoorDash and Uber also gained, rising around 3.4 percent and 3.3 percent respectively, lifted by optimistic analyst upgrades and growth announcements related to grocery and mobility expansion .
In the final analysis, this snapshot of market action underscores how easily policy headlines can sway sentiment—even when markets believe the risk is remote. Trade policy volatility, CEO political engagement, and fiscal headwinds can unsettle traders and lead to swift repricing. But beneath the day's clarity lies a tangled narrative of investor psychology, portfolio rotations, and fundamental business developments all playing out in real time.