(Bloomberg) -- Tesla Inc shares fell along with other electric carmakers on Tuesday, while aerospace companies surged after President Donald Trump announced a slew of policies that could have broad market implications. .
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Specifically, Trump ordered his administration to consider eliminating subsidies for electric vehicles and pro-auto policies, putting pressure on Elon Musk's company. He also announced plans to impose 25% tariffs on Mexico and Canada by February 1 and pledged to land U.S. astronauts on Mars during his inauguration speech on Monday.
"As we move into Trump 2.0, the market appears to be very sensitive and reactive to headlines from the new administration," said Walter Todd, president and chief investment officer of Greenwood Capital Associates. "This will likely increase the impact of various financial Market volatility.”
Investors are closely watching further Trump moves to assess their impact on markets. JPMorgan Chase & Co. is setting up a "war room" for this purpose. It is unclear how these policy recommendations will be implemented. For example, stocks of companies with tariff exposure have largely escaped the threat for now.
One area that the new administration has yet to touch upon is cryptocurrencies, which has the industry eagerly awaiting them.
“We’re seeing some selling on news in hot areas of the market like Tesla and cryptocurrencies,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. Prices higher ahead of inauguration "Even Chinese stocks, which benefited from Trump's lack of anger, mostly reversed course a day after recent profit-taking and are now flat."
electric slide
Tesla shares fell 4.7% on Tuesday, making it the second-largest weight in the S&P 500, while the Bloomberg Electric Vehicle Index fell 1.7% after Trump directed his administration to consider eliminating electric vehicle subsidies and other pro-car policies. Electric vehicle startups Rivian Automotive Inc. and Lucid Group Inc. also fell.
While Trump did not explicitly order the Environmental Protection Agency to rewrite the rules, his directive sets the stage for actions that could slow the adoption of electric vehicles in the United States.
Space stocks rise
Shares of aerospace companies rose as Trump pledged to send U.S. astronauts to Mars and "pursue our destiny into the stars."
Intuitive Machines Inc., which built and operated a lunar lander in a historic victory for private sector space exploration, rose 23% to post its best day in months, while Rocket Lab USA Inc. and Redwire Corp. .Both posted double-digit gains and hit record highs.
Trump media in trouble
Shares of Trump Media & Technology Group Corp. fell 14%, marking their worst day in the week since the election. Trump's social media company is prone to wild swings, with shares up 22% as of January 13.
tariff tensions
Trump's tariff plan hit Canadian energy and industrial stocks, but not as hard as feared. Meg Energy Corp. and Athabasca Petroleum Corp., for example, are falling but holding on to some of their gains from Monday. Similarly, shares of aircraft maker Bombardier Inc. fell 6% on Tuesday after rising 7.2% in the previous session.
The Nasdaq Golden Dragon China Index is little changed over the medium term as Trump has yet to announce tariffs on Chinese goods.
"While Trump likes to negotiate openly, it remains to be seen which bold tariff announcements will translate into policy changes," said Eric Sterner, chief investment officer at Apollon Wealth. He expects the new president to continue " Weaponizing” U.S. economic power in an attempt to force concessions from other countries, he believes his actions are not enough to trigger inflation.
Cryptocurrency takes a breather
Cryptocurrencies and crypto-related stocks have been relatively muted after Trump’s first day in office without any long-awaited policy moves to support digital assets. MicroStrategy Inc. shares fell as much as 7.3% in early trading, but recovered most of those losses and flipped between slight gains and losses. Meanwhile, Coinbase Global Inc. is also on the red-green line, while Hive Digital Technologies Ltd. and cryptocurrency miner Riot Platforms Inc. are trading slightly lower. Bitcoin gained more than 3% and was trading around $106,000.
Bloomberg reported last week that the incoming president was considering an executive order designating cryptocurrencies as a “national priority.” Ahead of the inauguration, he and his wife, Melania, launched a personal meme coin.
——With assistance from Natalia Kniazhevich and Esha Dey.
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