On June 5, 2025, global financial markets reacted sharply to a public dispute between U.S. President Donald Trump and Tesla CEO Elon Musk. Trump’s threat to cut off government contracts with Musk-owned companies led to a 14% drop in Tesla’s shares, dragging down Wall Street indices. This incident overshadowed positive developments, such as a phone call between Trump and Chinese Premier Xi Jinping aimed at easing trade tensions.
Read the article to know why despite some recovery in stock prices since April, investor sentiment remains fragile amid ongoing economic and geopolitical uncertainties.
Vocabulary Questions:
- What does “headwind” mean? “The headwinds haven’t gone away, but the ‘hopium’ rally could still have room to run. More on that below, but first, a roundup of the main market moves.” Use it in a sentence.
- What does “bearish” mean? “Sentiment among institutional investors reached extreme levels of bearishness in the wake of ‘Liberation Day’, and recession fears ballooned to historically high levels as well, Bank of America’s April fund manager survey showed.” Use it in a sentence.
- What does “allocation” mean? “International institutional investors may continue to rethink their allocation to U.S. assets, creating a long-term risk to U.S. stocks. “ Use it in a sentence.
Discussion Questions:
- Do you think political figures should be more cautious when publicly criticizing business leaders, considering how it affects the stock market?
- How much influence do you believe Elon Musk has over investor confidence compared to political leaders like Trump?
- If you were an investor, would a public feud like this make you sell, hold, or buy more shares of a company like Tesla? Why?
- Do you think the market overreacts to high-profile drama, or is it justified given the financial risks involved?
- How should companies like Tesla respond when political leaders threaten their government contracts publicly?