By STAN CHOE
NEW YORK (AP) — U.S. stocks are drifting on Tuesday as Wall Street’s momentum slows after setting record highs in each of the last two days.
The S&P 500 was 0.3% lower in early trading and on track for its first loss in four days. The Dow Jones Industrial Average was edging down by 21 points, or less than 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.5% lower.
Tesla helped pull the market lower as the relationship between its CEO, Elon Musk, and President Donald Trump soured even further. Once allies, the two have clashed recently, and Trump suggested there’s potentially “BIG MONEY TO BE SAVED” by scrutinizing subsidies, contracts or other government spending going to Musk’s companies.
Tesla fell 6.9% and was the heaviest weight on the S&P 500. It had already dropped a little more than 21% for the year so far coming into the day, in part because of Musk’s and Trump’s feud.
The U.S. stock market has made a stunning recovery from its springtime sell-off of roughly 20%. But challenges still lay ahead for Wall Street, with one of the largest being the continued threat of Trump’s tariffs.
Many of Trump’s stiff proposed taxes on imports are currently on pause, but they’re scheduled to kick into effect in about a week. Depending on how big they are, they could hurt the economy and worsen inflation.
Congress is also debating proposed cuts to tax rates and other measures that could send the U.S. government’s debt spiraling higher, which could push inflation upward. That in turn could mean higher interest rates, which would hurt prices for bonds, stocks and other investments.
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Other signals are also indicating exuberance in the market, such as demand for what are known as “blank-check companies” that hunt for privately held companies to buy.
Of course, “market bubbles are infamously difficult to predict and can endure far longer than anticipated before correcting,” according to the Barclays strategists led by Stefano Pascale and Anshul Gupta.
In the bond market, Treasury yields held relatively steady ahead of a suite of economic reports coming later this week.
The yield on the 10-year Treasury edged down to 4.23% from 4.24%.
In stock markets abroad, indexes fell modestly in Europe following more mixed sessions in Asia.
Japan’s Nikkei 225 fell 1.2%, and South Korea’s Kospi rose 0.6% for two of the larger moves.
AP Writers Teresa Cerojano and Matt Ott contributed.
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