NEW YORK – The stock market is coming off a powerful holiday-shortened week, with the S&P 500 and Nasdaq pushing further into record territory. However, as Dow Jones futures prepare to open Sunday evening, investors are bracing for a wave of political and economic uncertainty driven by President Donald Trump’s trade policy and a dramatic new political venture from Elon Musk.
While the market rallied on positive catalysts like a strong June jobs report, two major developing stories are set to dominate headlines and potentially dictate market direction in the week ahead.
Trump Prepares New Wave of Tariffs
President Trump is set to pivot from signing his tax-and-spending package into law back to his aggressive trade agenda. Over the weekend, the president confirmed he will send out tariff letters to approximately a dozen countries on Monday, marking the end of a 90-day pause on his “Liberation Day” tariffs.
Key U.S. trading partners, including Japan, the European Union, South Korea, and India, are reportedly scrambling to reach last-minute agreements to minimize the economic impact. The unilateral imposition of new tariffs could disrupt global supply chains and inject significant volatility into a market that has largely shrugged off risks in recent months.
Elon Musk Launches “America Party” as Tesla Loses Key Tax Credits
In a move set to roil both politics and Wall Street, Tesla (TSLA) CEO Elon Musk announced Saturday that he is forming a new “America Party.” The move is a direct response to President Trump’s new budget, which Musk has heavily criticized for projections that it will substantially increase the federal debt.
The new legislation directly impacts Tesla’s bottom line, ending lucrative U.S. EV tax credits after September 30 and immediately eliminating highly profitable zero-emission credits. This blow to Tesla’s profitability model has fueled Musk’s renewed feud with the Trump administration.
The political gambit comes as Tesla stock struggles. Shares fell 2.6% last week and have lagged since the company’s June 22 robotaxi launch. In stark contrast, rivals Uber (UBER) and Mobileye (MBLY) have seen their stocks surge, with Uber breaking out to a new high on Thursday. Musk’s deeper dive into politics is seen as a significant headwind for Tesla, as the stock has historically faltered during his high-profile political conflicts.
Market Rally’s Strength Faces Test
Last week’s rally was broad and robust. The Dow Jones Industrial Average gained 2.3%, the S&P 500 climbed 1.7%, and the Nasdaq composite advanced 1.6%. The strength was reflected in key growth ETFs, with software (IGV) and semiconductor (SMH) funds hitting new highs.
Investors will be closely watching several key events this week:
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Airlines: Delta Air Lines (DAL) kicks off airline earnings season on July 10.
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AI and Chips: AI chip giant Taiwan Semiconductor Manufacturing (TSM) will release crucial June and Q2 sales data on Thursday, providing insight into demand from customers like Nvidia (NVDA) and Apple (AAPL).
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Stocks in Focus: Several stocks remain in or near buy zones after last week’s action, including Cadence Design Systems (CDNS), Nextracker (NXT), ServiceNow (NOW), and Shopify (SHOP).
For now, the market’s upward momentum is undeniable. The critical question for investors is whether that strength can withstand the fresh wave of geopolitical and corporate drama poised to unfold.
