Market on Edge: Musk Declares Political War, Trump Prepares Tariff Onslaught as Dow Futures Open

The stock market is riding a wave of record highs, but a political powder keg is set to ignite this week. As futures prepare to open, investors are bracing for impact from President Trump’s new tariff offensive and a stunning political maneuver by Tesla CEO Elon Musk.

NEW YORK – The U.S. stock market, fresh off a record-setting, holiday-shortened week, faces a tense reopening Sunday evening. While the S&P 500 and Nasdaq celebrated new all-time highs, a perfect storm of political and economic volatility is brewing, threatening to disrupt the rally.

Dow Jones futures, along with S&P 500 and Nasdaq futures, are set to resume trading at 6 p.m. ET. However, the focus is quickly shifting from last week’s bullish jobs data to two seismic political developments.

Musk’s “America Party” and Trump’s Tariff Letters

In a move that caught Washington and Wall Street by surprise, Elon Musk announced Saturday his intention to form a new political party, the “America Party.” The declaration comes as a direct challenge to the two-party system and follows a renewed feud with President Donald Trump over the recently signed tax-and-spending package.

The new legislation, signed into law by Trump on July 4th, delivers a significant blow to Musk’s electric vehicle giant, Tesla (TSLA). The bill eliminates crucial U.S. EV tax credits after September 30th and immediately ends highly profitable zero-emission credits. This move is expected to seriously impact Tesla’s sales and profitability, even as the company anticipates a short-term demand surge before the credits expire.

Compounding the market’s anxiety, President Trump is pivoting from his budget victory to his signature trade policy. The White House confirmed that “probably 12” letters will be sent on Monday to various countries, officially notifying them of new tariffs. This action marks the end of a 90-day “Liberation Day” tariff pause and has key trading partners like the European Union, Japan, and South Korea scrambling to minimize the economic damage.

Market Rally Faces First Major Test

The impending political turmoil stands in stark contrast to last week’s market performance.

• The Dow Jones Industrial Average surged 2.3%.

• The S&P 500 climbed 1.7%, moving further into record territory.

• The Nasdaq Composite advanced 1.6% to a new high.

• The small-cap Russell 2000 jumped 3.5%, finally clearing its 200-day moving average.

This strength was broad-based, with tech ETFs like the iShares Expanded Tech-Software Sector ETF (IGV) and the VanEck Vectors Semiconductor ETF (SMH) hitting new highs. However, the question on every investor’s mind is whether this momentum can withstand the coming headwinds.

Tesla, Uber, and Key Stocks in Focus

Tesla stock (TSLA) slipped 2.6% last week amid headlines of a minor robotaxi accident and an executive shake-up for its Optimus robot project. Since its robotaxi launch on June 22, Tesla shares have fallen slightly. In contrast, competitors in the mobility space have thrived. Uber (UBER) stock has rallied nearly 12% and broke out from a flat base, while driver-assist leader Mobileye (MBLY) has soared almost 30%.

Musk’s political ambitions could further complicate the picture for Tesla stock, which has historically been volatile in response to his political statements and feuds.

Beyond the mobility sector, several other stocks remain in attractive buy zones for investors, including:

• Cadence Design Systems (CDNS): Rallied 7.1% last week, clearing a key buy point after the administration lifted some chip-design software export restrictions.

• Nextracker (NXT): Vaulted nearly 14% after the final budget proved less damaging to solar incentives than feared.

• Shopify (SHOP) & ServiceNow (NOW): Both software giants are trading within actionable buy zones after strong weekly gains.

What Investors Should Watch Now

The week ahead is packed with market-moving catalysts. On Thursday, July 10, Delta Air Lines (DAL) kicks off airline earnings season. More critically, AI chip titan Taiwan Semiconductor Manufacturing (TSM) will release its June sales data, providing a crucial health check for customers like Nvidia (NVDA) and Apple (AAPL).

While the market has demonstrated remarkable resilience, investors are advised to proceed with caution. The collision of a new trade war and unprecedented political maneuvering by one of the world’s most influential CEOs creates a highly unpredictable environment. While opportunities exist in strong individual stocks, chasing extended plays could be risky. Investors should focus on their watchlists and prepare for potential volatility as the political drama unfolds.