Tesla revenue dented by softer demand as Musk warns of "rough quarters" ahead
Investing.com - U.S. stock futures point higher on Friday following a high-profile feud between President Donald Trump and billionaire Elon Musk. The fight weighs heavily on shares in Musk’s electric vehicle giant Tesla (NASDAQ:TSLA), shaving hundreds of billions of dollars worth of market value off the stock. Investors are turning their gaze to key upcoming labor market data, while Chinese blue-chip stocks edge lower after Trump and Chinese leader Xi Jinping hold talks over trade tensions.
1. Futures higher
U.S. stock futures climbed ahead of the final trading day of the week, with investors assessing the implications of the verbal brawl between Trump and Musk and awaiting a key labor market report.
By 03:37 ET (07:37 GMT), the Dow futures contract had risen by 188 points, or 0.4%, S&P 500 futures had risen by 25 points, or 0.4%, and Nasdaq 100 futures had increased by 79 points, or 0.4%.
The main averages finished lower after a choppy session on Thursday. Trump and Musk’s bust-up especially pulled down shares in electric carmaker Tesla, and dampened hopes for progress in global trade negotiations sparked by a call between Trump and Chinese counterpart Xi Jinping.
Markets were also factoring a second-consecutive rise in weekly initial jobless claims, as well as comments from Kansas City Federal Reserve President Jeff Schmid expressing worries over the impact of Trump’s sweeping tariffs on inflation. Schmid’s statement further cemented expectations that the Fed will hold interest rates at its upcoming meeting later this month -- and perhaps for a longer period of time beyond that.
2. Trump-Musk feud
Indications were emerging of a potential de-escalation in a public feud between Trump and Musk, with the president telling Politico that the relationship is "okay" and "going very well, never done better".
Meanwhile, White House aides are planning for the two to hold a call on Friday in a bid to forge a detente in the spat, Politico reported.
The discussion would come after Musk and Trump -- formerly close political allies only weeks ago -- exchanged heated words over a massive tax-and-spending package backed by the president.
"Trump’s relationship with Musk seems headed toward a full rupture, a divorce that could undermine the former’s political power at a time when he’s trying to push an increasingly controversial bill through Congress," analysts at Vital Knowledge said in a note.
Musk, who recently decided to spend less time in politics in order to focus on his companies, has slammed the heavy expenditures included in Trump’s so-called "big, beautiful bill". While the fight began days ago, it devolved on Thursday into online sparring over who deserved credit for Trump’s election win, with the two later trading threats on their respective social media platforms.
Trump in particular suggested that he could cut off billions of dollars worth of subsidies to Musk’s businesses, sending shares in Tesla -- which is helmed by Musk -- down by more than 14%. The sell-off wiped some $150 billion in market value off the stock, while Musk’s personal net worth plummeted by about $27 billion to $388 billion, according to Forbes data cited by Reuters.
In response, Musk wrote about possibly creating a new political party, hinted at Trump’s inclusion in government documents linked to late sexual offender and financier Jeffrey Epstein, and seemed to support an impeachment of the president.
3. Nonfarm payrolls ahead
On the economic calendar, the focus will be squarely on the release of the Labor Department’s all-important monthly nonfarm payrolls report on Friday, which may provide a further glimpse into the impact of Trump’s aggressive tariff agenda on the broader economy.
Economists are projecting that the U.S. economy added 126,000 jobs in May, down from 177,000 in the prior month, while the unemployment rate is expected to match April’s reading of 4.2%.
"Markets are bracing for a weak U.S. payrolls number," analysts at ING said in a note to clients, adding that a tepid figure could "place more emphasis on the recession risk narrative".
A separate report earlier this week found that U.S. private employers added fewer jobs than anticipated in May, in a sign of potential cooling in the labor market as companies grapple with uncertainty around Trump’s tariff policies -- although analysts have flagged relatively little correlation between private payrolls and the Bureau of Labor Statistics’s labor market data.
Elsewhere, job openings grew in April, although layoffs increased, potentially indicating some softening in demand for workers.
4. Chinese stocks lower after Trump-Xi call
China’s blue-chip Shanghai Shenzhen CSI 300 average and Hong Kong’s Hang Seng index both dipped on Friday after a call between Trump and Chinese leader Xi Jinping provided little clarity around the trajectory for trade tensions.
Investors had been hoping that the conversation on Thursday, which had been previously telegraphed by the White House this week, would lead to some easing in a trade dispute between the U.S. and China.
Although both sides recently reached an agreement to lower and pause tit-for-tat tariffs on one another, the fragile truce between the world’s two largest economies has been threatened by a disagreement over critical "rare earths" minerals.
Xi told Trump to back away from his punishing tariff policies during the call, which lasted for more than a hour, Reuters reported, citing a Chinese government summary.
Trump later said on social media that the talks had resulted in a "very positive conclusion", adding that "there should no longer be any questions respecting the complexity of Rare Earth products". He also told reporters that the U.S. relationship with China and a possible trade deal is "in very good shape", noting that they had agreed to hold more discussions.
5. Oil on pace for weekly gains
Oil prices slipped lower Friday on continued concerns over slowing growth and weakening demand, but were still on track for the first positive week in three amid growing expectations that global supplies will be tighter than initially expected this year.
At 03:37 ET, Brent futures dropped 0.8% to $64.85 a barrel, and U.S. West Texas Intermediate crude futures fell 0.8% to $62.86 a barrel.
On a weekly basis, both benchmarks were on track to settle higher after falling for two straight weeks. Brent has advanced 2% this week, while WTI is trading 4% higher.