Stock market today: Dow jumps, Nasdaq slides as Trump tax bill sails through Senate

US equities saw mixed performance Tuesday as the Senate passed President Trump's tax and spending bill, featuring amendments like the removal of a state-level AI regulation ban and softened clean-energy credit phase-outs, which buoyed solar stocks. Federal Reserve Chair Powell indicated tariffs are delaying potential rate cuts, despite robust May job openings data that suggests a healthy but 'stasis' labor market, while manufacturing activity remains contractionary. Trade policy uncertainty persists, with the administration seeking narrower agreements ahead of a July 9 tariff deadline, though some analysts warn against market over-optimism. Concurrently, individual stock movements were notable, with Tesla declining amid a renewed Trump-Musk feud and Robinhood surging on crypto service expansion.

Analysis

The US equity market displayed a fractured performance, with the Dow Jones Industrial Average gaining over 1% while the S&P 500 and Nasdaq Composite fell 0.1% and 0.7%, respectively. This divergence was driven by cross-currents from fiscal policy, monetary policy commentary, and mixed economic data. The Senate's narrow 50-50 passage of President Trump's major tax and spending bill acted as a primary catalyst, directly boosting specific sectors. Notably, solar stocks like Sunrun (RUN), Enphase (ENPH), and SolarEdge (SEDG) rallied between 4% and 10% after lawmakers softened the phase-out of clean-energy tax credits. Conversely, the bill's removal of a ban on state-level AI regulation contributed to weakness in some tech names like Nvidia (NVDA). Meanwhile, Fed Chair Jerome Powell's remarks that tariffs are delaying potential interest rate cuts introduced a hawkish tone, complicating a market that has priced in a 'Goldilocks scenario.' This was further muddled by economic reports showing robust May job openings at 7.76 million, the highest since November 2024, yet a contracting manufacturing sector with an ISM PMI of 49.0. Idiosyncratic stock stories were also prominent: Tesla (TSLA) shares slid over 5% amid a renewed feud between CEO Elon Musk and President Trump over subsidies, while laggard UnitedHealthcare (UNH) surged 4.5%, leading the Dow's advance.

Key Decisions for Investors

• Monitor the progress of the tax bill in the House, as its final form will have direct P&L implications for sectors like clean energy, healthcare, and technology.
• Investors should be cautious of the market's 'Goldilocks' pricing, as Fed Chair Powell explicitly linked tariffs to a delayed rate-cut cycle, creating a headwind that may not be fully discounted.
• Evaluate exposure to companies with high political sensitivity, such as Tesla (TSLA), where risks from subsidy threats are creating significant stock-specific volatility independent of market fundamentals.
• Consider opportunities in beaten-down large caps, exemplified by UnitedHealthcare's (UNH) 4.5% rebound, which suggests a potential rotation into undervalued stocks as the market digests new fiscal policy.
• Given the conflicting signals between strong labor openings and weak manufacturing PMI, maintain a balanced portfolio and watch high-frequency data closely to gauge the economy's true trajectory ahead of the Fed's next decision.