Stocks were mixed on Tuesday after the S&P 500 and Nasdaq Composite each reached record highs in the previous session. Market participants also reacted to the passage of President Donald Trump's massive spending package while also keeping a close eye on the latest developments regarding trade.
The S&P 500 (NYSE: SPY) was flat Tuesday after closing above 6,200 for the first time on Monday, while the Nasdaq (NASDAQ: QQQ) slipped 0.8% lower as both indexes were impacted by weakness in Tesla (NASDAQ: TSLA) shares. The Dow Jones Industrial Average (NYSE: DIA), meanwhile, climbed over 400 points as investors rotated out of growth stocks.
The electric carmaker's stock was under pressure on Tuesday after Trump called for the Department of Government Efficiency (DOGE) to look into the government subsidies given to Elon Musk's companies after the billionaire again criticized the president's One Big Beautiful Bill Act, calling it "utterly insane and destructive" over the weekend.
"Elon may get more subsidies than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa," Trump said in a post on his social media platform Truth Social. "No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!"
The tax bill cleared another major hurdle in the Senate on Tuesday, passing the congressional chamber with a tiebreaker vote from Vice President JD Vance for a final count of 51-50. The bill will now move back to the House for another round of voting as lawmakers work to meet Trump's July 4 deadline. A key amendment that passed in the latest version of the spending package is a strike-down of the proposed multiple-year ban on state-level artificial intelligence regulation.
Meanwhile, investors digested commentary from Federal Reserve Chair Jerome Powell on Tuesday, where the policy leader said during a panel at the European Central Bank's Forum on Central Banking in Portugal that the Fed would have likely cut interest rates by now if Trump did not introduce his tariff policies on most trading partners.
"In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence," Powell said, adding that any forward decisions will remain data dependent as central bankers continue to combat inflation.
Goldman Sachs Chief U.S. Economist David Mericle said in a late Monday note that the firm now sees the Fed's first rate cut starting in September, up from its previous timeline for a December cut. The firm is calling for three 25 basis point cuts in September, October and December, along with two more reductions in 2026. That forecast will bring the central bank's overnight borrowing rate to a range of 3% to 3.25% by the end of the year, down from the firm's previous outlook of 3.5% to 3.75%.
"The very early evidence suggests that the tariff effects look a bit smaller than we expected, other disinflationary forces have been stronger, and we suspect that the Fed leadership shares our view that tariffs will only have a one-time price level effect," Mericle wrote.
On the economic front, job openings unexpectedly rose in May to reach their highest level since November 2024, the Bureau of Labor Statistics reports Tuesday, as investors continue to closely monitor the health of the U.S. labor market.
The Job Openings and Labor Turnover Survey (JOLTS) showed 7.76 million openings last month, rising from the April's print of 7.39 million and coming in ahead of expectations. Beneath the headline, 5.5 million hires were made in May, down from April's 5.61 million to bring the hiring rate to 3.4% from 3.5%. The quits rate, which is often used to represent worker confidence, ticked higher in May to 2.1% from 2%.
The report come ahead of the Labor Department's "official" jobs reading for June slated to release Thursday morning. Economists expect the report to show nonfarm payroll additions rise by 110,000 and for the unemployment rate to tick higher to 4.3% last month.