U.S. equity futures fell early Tuesday as the second half of 2025 began, following a record-breaking quarter. Futures tied to the Dow Jones Industrial Average slipped 45 points, or 0.1%. The S&P 500 declined 0.3%, while the Nasdaq Composite dropped 0.4%.
Shares of electric vehicle maker Tesla fell nearly 5% in premarket trading after President Donald Trump suggested that the Department of Government Efficiency (DOGE) should review funding for CEO Elon Musk’s companies. The proposed review followed Musk’s criticism of Trump’s tax and spending bill, which Musk called detrimental to the country’s fiscal health. Trump responded, asserting that Musk’s ventures may receive more subsidies than any other business in history, and suggested significant savings could be made by cutting these subsidies.
This isn’t the first time Trump and Musk have clashed over fiscal policies. Earlier this year, Trump suggested that Musk had overreacted to past regulatory measures. Despite this tension, the broader market exhibited resilience.
The S&P 500 advanced 0.5% on Monday, hitting another record close, while the Nasdaq also rose to fresh all-time highs, gaining 0.5%. The blue-chip Dow Jones added 275.50 points, or 0.6%. Canada has recently moved to rescind a levy on imports to foster better trade relations with the U.S. This came after President Trump threatened to terminate all trade discussions with Canada, adding another layer of complexity to an already volatile trading environment.
Despite the initial market jitters at the beginning of the second half of the year, some analysts maintain an optimistic outlook. Mike Wilson, chief U.S. equity strategist and chief investment officer at Morgan Stanley, anticipates a broader market recovery fueled by potential Federal Reserve rate cuts either in the second half of this year or in 2026. He posited that pent-up demand could especially benefit interest rate-sensitive sectors like manufacturing and housing.
U.S. equity futures react to Trump
Fed Chair Jerome Powell is slated to speak at the European Central Bank’s Forum on Central Banking in Portugal at 9:30 a.m. ET. Powell has indicated that policymakers will take a cautious approach until the impact of tariffs on prices becomes clearer.
Investors are also keenly awaiting the S&P Global Purchasing Managers’ Index, which will offer insight into manufacturing activity, and the ISM manufacturing report, both of which are due for release. Several stocks made notable moves in pre-market trading on Tuesday:
– Tesla: Shares fell nearly 5% amidst the latest criticism from President Trump. – Sweetgreen: The fast-casual restaurant chain’s shares slid more than 3% after TD Cowen downgraded its rating to hold from buy and cut its price target by $10 to $15.
Analyst Andrew Charles cited declining sales at urban locations and competitive pressures as concerns. – Mattel: The toymaker’s stock rose 2% following an upgrade from Goldman Sachs, which changed its rating to buy from neutral. European stocks opened tentatively higher, with the pan-European Stoxx 600 trading around 0.1% higher.
Utilities stocks led the gains, rising around 1%. In Asia-Pacific, markets traded mixed as investors weighed the implications of U.S. tariff policies. Japan’s Nikkei 225 fell 1.24%, while South Korea’s Kospi rose 0.58%.
Goldman Sachs has adjusted its Federal Reserve rate-cut forecast, now predicting a cut in September instead of December. The investment bank cited the less severe than expected impact of tariffs and stronger disinflationary forces as reasons for the adjustment, even though the labor market still appears robust. As the second half of 2025 gets underway, investors remain focused on geopolitical developments, fiscal policies, and economic indicators.
The interaction between U.S. and global markets continues to be influenced by political moves, central bank policies, and corporate earnings, creating a dynamic environment for traders and investors alike.
