(Bloomberg) — Shares of Tesla Inc. slumped Tuesday alongside other electric-vehicle makers, while space company stocks saw big gains, after President Donald Trump announced a series of policies that could have wide-ranging impacts on markets.
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Specifically, Trump ordered his administration to consider removing subsidies for EVs and policies favoring the vehicles, which weighed on Elon Musk’s company. He also announced plans to impose 25% tariffs on Mexico and Canada by Feb. 1, and pledged in his inaugural address on Monday to land American astronauts on Mars.
“As we enter Trump 2.0, the market appears very sensitive and reactionary to headlines from the new administration,” said Walter Todd, president and chief investment officer at Greenwood Capital Associates. “This could increase volatility for a variety of financial markets.”
Investors are closely watching further moves from Trump to assess their affect on markets. JPMorgan Chase & Co. is establishing a “war room” for just this purpose. Exactly how the policy proposals will play out isn’t clear yet. For example, shares of companies with tariff risks are largely shrugging off the threats for now.
One area new administration hasn’t touched yet is cryptocurrencies, leaving that industry eagerly waiting.
“We are seeing some sell the news in hot parts of the market like Tesla and crypto that were priced for more going into the inauguration,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. “Even China stocks, which benefited from a lack of ire from Trump, have mostly reversed and are now flat on the day after near-term profit taking.”
EV Slide
Tesla fell as much as 4.7% and was the second biggest weight on the S&P 500 Index Tuesday, while the Bloomberg Electric Vehicles Index slid as much as 1.7%, after Trump directed his administration to consider removing EV subsidies and other policies that favor the vehicles. EV startups Rivian Automotive Inc. and Lucid Group Inc. also slumped.
While Trump didn’t explicitly order the Environmental Protection Agency to rewrite the rules, his directive sets the stage for actions that could slow the adoption of EVs in the US.
Space Stocks Jump
Shares of space companies leaped on Trump’s promise to “pursue our manifest destiny into the stars” by landing American astronauts on Mars.
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