Tesla Shares gain 7% After $152 Billion Selloff Despite Uncertainty Over Musk-Trump Truce

Tesla shares staged a strong comeback, rising 7% on Friday after a dramatic $152 billion selloff triggered by a very public fallout between CEO Elon Musk and former U.S. President Donald Trump. Although hopes of a political truce flickered briefly, the situation remains tense, with a White House official stating that Trump has no immediate plans to reconnect with his former ally.

The rebound follows a 14% plunge in Tesla’s stock on Thursday—its steepest drop in recent memory—amid market jitters over a proposed tax bill championed by Trump. The bill, if passed, would eliminate the widely used $7,500 federal tax credit for electric vehicles by the end of 2025, dealing a blow to Tesla and other EV manufacturers.

Elon Musk had taken to X (formerly Twitter) to sharply criticize the bill, suggesting it was a direct attack on green innovation. In response, Trump hinted at slashing federal contracts with Musk-led companies, including aerospace giant SpaceX. This tit-for-tat exchange sent Tesla stock tumbling, erasing billions in shareholder value in just hours.

Despite the feud, some investors took heart from reports that a Musk-Trump dialogue might still happen, especially after Musk signaled his openness to détente. Still, the political fallout has cast a long shadow over Tesla’s outlook. As of now, the company’s stock is down nearly 30% year-to-date, reflecting both soft vehicle sales and the brand’s growing political entanglements.

The recovery in Tesla’s share price coincided with broader gains across Wall Street, driven by a stronger-than-expected U.S. jobs report. The economy added 139,000 jobs in May, exceeding analyst estimates. Wages also rose faster than expected, reinforcing views that the Federal Reserve is unlikely to cut interest rates in the near future.

In response, U.S. Treasury yields surged. The 10-year note yield rose to 4.47%, while the 30-year yield climbed to nearly 4.94%. The upbeat jobs data also gave a boost to the dollar, which strengthened against major global currencies, including the euro and Japanese yen.

Globally, markets reacted with cautious optimism. The pan-European STOXX 600 index closed up 0.31%, while Japan’s Nikkei rose 0.50%. However, emerging markets remained under pressure, with MSCI’s Asia-Pacific index outside Japan slipping 0.14%.

Despite the recent rally, concerns remain over Tesla’s high valuation. The stock is still trading at over 120 times expected earnings—well above traditional automakers and even most tech giants. Investors are now closely watching whether Musk can navigate the political minefield and stabilize Tesla’s brand as competition in the EV sector heats up.

With both market volatility and political drama at play, Tesla’s journey ahead remains anything but smooth. Yet for now, Friday’s bounce offers a brief reprieve in an otherwise turbulent year for the EV pioneer.