TheDrop Market Analysis, 06/05/25

Stocks sank on Thursday due to political turmoil and poor economic prospects.

Elon Musk's controversial Tweet starting the political match online (Source: X).

Most of the largest indexes performed exceptionally well at the start until the controversial Twitter war ensued between President Donald Trump and Elon Musk. Ultimately, the Dow fell 0.25%, the S&P 500 fell 0.53%, and the Nasdaq fell 0.83%. The Russell bore the lowest brunt with a mere 0.05% decline.

Stocks plummeted over the course of the day as the President and the Billionaire traded shots online through Truth Social and X, respectively. Musk started the dispute after an initial post the day before reading "KILL the BILL," referring to the "Big Beautiful Bill" or "BBB" for short which the Trump administration has brought forth nearly to passage in the Senate after succeeding in the House. The bill would make the Tax Cuts and Jobs Act of 2017 permanent while adding additional tax cuts and cutting Medicaid benefits. Elon Musk, persisting on his crusade against increasing the deficit, charged at the president and his allies, starting a media war with Trump threatening to end all subsidies on Elon's SpaceX, and Elon claiming that Trump is on the Epstein files. The media war not only caused the formal dissolution of their previously cordial relationship but also caused investors to go on a frenzy online due to political polarization and uncertain prospects of the future. With a large Republican coalition now favoring Musk, including Rand Paul and Thomas Massie, the vote may not pass, going against what investors hoped for the president to do: tax cuts.

Among the greatest declines were the two's stocks themselves: DJT and Tesla. DJT plummeted 8% while Tesla fell by an even larger 14.3%. The new reputation of the two as immature, or for the president specifically "unpresidential" has tarnish both of their images and led to investors no longer wishing to remain shareholders.

Other stocks fell as well, including most of the Mag. 7 except for Google, Microsoft, and Amazon.