JAKARTA The United States or Wall Street stock market closed lower, triggered by a sharp decline in Tesla's shares and concerns ahead of tariff talks between US President Donald Trump and Chinese President Xi Jinping.
Tesla (TSLA.O) shares fell more than 14 percent due to the increasing feud between Elon Musk's CEO and President Donald Trump. Shares of the electric car company have slumped in the last four of the last five sessions and lost about 150 billion US dollars in valuation.
Musk has recently been increasingly vocal in criticizing the new tax law passed by the Trump administration. On the other hand, Trump accused Musk of being upset because the bill revoked tax incentives for electric vehicle purchases.
"The bad impact on Tesla's shares is clear," said Mark Spiegel, portfolio manager at Stanphyl Capital, quoted by Reuters on Friday, June 6. I see no major impact on the market in general, other than the small influence on the index. The stock market has many other problems, but Tesla is not the main one," he added.
The Dow Jones Industrial Average fell 108 points or 0.25 percent to 42,319.74. The S\P 500 index corrected 31.51 points or 0.53 percent to 5,939.30, while the Nasdaq Composite weakened 162.04 points or 0.83 percent to 19,298.45.
Market pressure is also exacerbated by data from the service sector and private sector work that is weaker than expected, sparking fears of a slowdown in the economy. Investors are now awaiting reports of non-farm payroll to be released this weekend.
Initial unemployment claims data showed an increase in the number of Americans who applied for unemployment benefits for the second week in a row. This reinforces the signal that the labor market is starting to weaken.
Although President Trump called for a cut in interest rates, Federal Reserve Chair Jerome Powell has yet to take any steps. He chose to wait for additional data before deciding on a policy, given the uncertainty of the tariff is still ongoing.
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The president of the Federal Reserve of Kansas City, Jeff Schmid, also voiced concerns that new rates could trigger inflation again. He expects price pressure to appear in the coming months, although it is not yet certain how long the impact will last.
Schmid's comments confirm that it is likely that the Fed will maintain its benchmark interest rate in the next June 17'18 meeting, in line with market expectations.
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