New York Stock Market Mixed on the First Day of Second Half After Record Highs

Tesla Drops Sharply then Narrows Loss After Trump Attack

Citigroup: "Technically Overbought, Heightened Risk of Profit Taking"

The rally that pushed U.S. stocks to record highs weakened, so on the 1st (local time), the New York market opened lower, but losses receded as employment data turned out stronger than expected.

At 10:30 a.m. Eastern Standard Time, the S&P 500 had recovered to about the same level as the previous day, the NASDAQ was down 0.2%, and the Dow Jones Industrial Average was up 0.4%.

Tesla shares at one point plunged as much as 7.7% after President Trump threatened that the Department of Government Efficiency (DOGE) would investigate the government subsidies received by Elon Musk's company and examine his immigration status. As of this time, the decline had narrowed to 3.8%.

Trump's attacks on Musk intensified after Musk last weekend criticized President Trump's tax cut bill as "completely insane and destructive." Musk retorted to the comments about investigating government subsidies, saying, "Just cut them off right now."

The 10-year Treasury yield rebounded from its lowest level in two months, rising by 2 basis points (1bp=0.01%) to 4.25%. The Bloomberg Dollar Spot Index fell 0.1%.

Citigroup pointed out that the market was lingering near the most overbought technical levels in a year, increasing the risk of profit taking.

Mike Wilson, Chief U.S. Equity Strategist and CIO at Morgan Stanley, said in a CNBC interview the previous day, "We believe this will be a broader recovery." He added, "If the Fed cuts rates in the second half of this year or next year, the market could see a gradual recovery," since a significant amount of latent demand exists in rate-sensitive markets.

On this day, Chair Powell is set to attend a panel of central bank governors held in Sintra, Portugal. This comes as the Trump administration steps up its criticism that the Fed's rate cuts are too slow. Powell said last week that policymakers are expected to maintain monetary policy until clear results emerge on the impact tariffs have on prices.

Josh Hurt of Vanguard told Bloomberg, "The Fed's rate policy is likely to stay the same for the time being." He said, "If the job market doesn't deteriorate, the Fed can be patient," and expected the Fed to cut rates twice by the end of this year.

Meanwhile, the Republican leadership in the U.S. Senate is still proceeding with a vote on President Trump's $3.3 trillion tax and spending bill. Although in danger due to internal Republican conflict, Treasury Secretary Scott Besant predicted on FOX News that the Senate would approve the bill by the afternoon of the 1st.

By Kim Jung-ah, Guest Correspondent kja@hankyung.com