Markets drop amid debt jitters, Tesla climbs on Musk plan to lower political spending

As the U.S. economy faces heightened uncertainty, stocks took a slight dip on Tuesday after a six-day winning streak, with the S&P 500 dropping by 0.39%. The downturn comes just a day after the top credit ratings agency Moody’s downgraded U.S. debt from its top rung—the last of the leading agencies to do so.

Moody’s decision was less a function of President Trump’s wide-ranging tariff campaign than a reaction to soaring U.S. debt, with the ratings agency arguing that successive administrations have failed to reverse the trend of fiscal deficits and growing interest costs. The move did not come as a major surprise, with Treasury Secretary Scott Bessent downplaying the downgrade as a “lagging indicator.”

Still, analysts argued that Trump’s tariff strategy could worsen the situation as the U.S. debt situation grows increasingly unsustainable. “Our view is that Liberation Day has likely brought that reckoning forward,” wrote Deutsche Bank’s head of global macro and thematic research Jim Reid, in a note on Monday. “The U.S.’s exorbitant privilege—its ability to borrow well below fair value—is gradually eroding.”

Volatility continues

Trump’s second tenure has been marked by a market roller coaster, with stocks plunging in April after he announced his punishing tariff campaign and then creeping back up over the past month as his officials walked back the pronouncement. Until today, the S&P 500 had posted gains for six straight days, reaching its highest mark since late February.

Stocks dipped modestly on Tuesday, with popular tech stocks including Meta and Microsoft dropping by less than a percent. Bucking the trend, however, was Tesla, which rose 0.51%. Speaking at a Bloomberg forum in Qatar, the Tesla CEO seemed to hint that he would be spending more time with his electric car company, telling the audience via videoconference that he would be doing “a lot less” political spending in the future. “I’ve done enough,” he said, adding that he was committed to leading Tesla for the next five years.

Aside from the looming threat of tariffs, the biggest question in Washington right now is Trump’s domestic policy legislation, which he has dubbed his “big, beautiful bill.” The House is currently debating key sections that include massive tax breaks, defense spending, and cuts to Medicaid—the latter of which Trump reportedly opposes. Another point of contention remains state and local tax deductions, or SALT, with some Republican lawmakers from higher-tax states like New Jersey and New York pushing for a higher cap.

Trump did notch a major win on Monday night as the Senate voted to begin debate on one of his signature pieces of legislation—a bill that would establish regulation for stablecoins, a type of cryptocurrency backed by the U.S. dollar, which Trump has championed. After Democrats opposed an initial version of the bill, enough lawmakers voted on Monday night to advance the legislation, signaling its potential passage later this year. Shares for Coinbase, the top U.S. crypto exchange, dropped by 0.99% on Tuesday, days after its admission of a data breach by cybercriminals.

This story was originally featured on Fortune.com