The Dow Jones slumped 0.3 percent to 42,319 and the S&P 500 lost 0.5 percent to 5,939. The Nasdaq fell 0.8 percent to 19,298.
The relationship between Trump and Musk imploded in public view, with the US president expressing disappointment with his billionaire former aide’s criticisms.
Musk, who had slammed the Republican president’s proposed massive spending bill, hit back in real time on social media.
Tesla shares plunged by more than 14 percent, losing over US$100 billion in market capitalisation, as Trump said he had asked “crazy” Musk to leave his administration.
He also threatened to take away the tech tycoon’s government contracts.
Patrick O’Hare of Briefing.com said Tesla had weighed “heavily on the broader market,” particularly the consumer discretionary sector.
“But all in all, the market itself is holding up reasonably well, given the scope of that decline,” he added.
Investors also digested the outcome of a long-awaited phone call between Trump and Chinese President Xi Jinping, looking for signs that both leaders could open doors to a longer-lasting truce in trade tensions.
“There were no new negative developments,” O’Hare said, adding that markets appreciated the mutual approach of allowing more time to work things out.
Looking ahead, investors will be eyeing official employment data due on Friday, to gauge the health of the US economy as Trump’s tariffs ripple through various sectors. (AFP)
