Stocks may be out of their tariff doldrums, but the U.S. economy still faces a rocky road ahead. The Trump administration faced its latest rift on Tuesday, as one of the president’s most influential supporters, Elon Musk, denounced a Trump-backed tax bill as a “disgusting abomination.”
Despite the fireworks, investors were optimistic ahead of a teased meeting between Trump and Chinese President Xi Jinping, which White House aides have said is likely to occur this week. The S&P 500 rose 0.58% on Tuesday, driven by tech stocks like Nvidia, which rose 2.80%.
Strained relations
After supporting Trump’s run for a second term with massive donations and campaign appearances, Musk took the helm of the newly-created Department of Government Efficiency (DOGE), a role that let the Tesla and SpaceX CEO embed himself deeply in the White House. But as Trump’s aggressive tariff policies threatened his portfolio of companies, and high profile amid spats with other members of the White House, Musk began to distance himself from the president in a series of public interviews.
Musk’s vocal rejection of Trump’s so-called “big, beautiful” bill in an X post on Tuesday, however, marked the deepest split between the two leaders. Last week, Musk announced that he would leave the government after his time as a “special employee” expired, returning to leading Tesla, SpaceX and his other ventures full-time.
In his post, Musk—who has led the administration’s cost-cutting campaign—characterized Trump’s bill as “pork-filled,” adding that any lawmakers who voted for it “know you did wrong.” The bill includes steep tax cuts, reductions in spending on Medicaid and food assistance, and increased funding for the military and migrant deportations. Tesla’s share price gained 0.46% on Tuesday and has risen around 55% since hitting a low around $220 in April.
While Musk and Trump grow further apart, investors are watching another key relationship: Trump and Xi Jinping. The U.S. and Chinese governments have gone back and forth on tariffs and export control policies, causing stocks to see-saw over the past few months. But on Tuesday, stocks rose as investors anticipated a meeting that could help secure a trade agreement between the two countries, which had agreed to scale back tariffs for 90 days in mid-May.
Trump’s crypto exploits were also back in the headlines on Tuesday amid reports that the president’s team planned to launch a digital wallet where users can store and swap cryptocurrencies, including Trump’s self-branded memecoin. Eric Trump and Don Jr., who have led their father’s crypto projects, denied any knowledge of the wallet’s launch. Bitcoin rose 0.38% at the time of publication.