The Trump-Musk feud could be one of the catalysts for a coming 10% stock correction, former JPMorgan strategist says
Former JPMorgan chief market strategist Marko Kolanovic sees a stock market pullback in the cards, and the Trump-Musk feud could be one of the triggers that sets off a decline.
Speaking on CNBC on Thursday, Kolanovic predicted a coming correction of 5%-10% that could be set off by a drop in Tesla's stock price.
"It's a little bit of a sideshow. It's important for certain companies, and it can spill over," Kolanovic said of the president's fallout with Musk. "Tesla is one of the biggest holdings of retail investors. There's a little ecosystem of stocks around it. I think it could be a little bit of a catalyst."
In a post on X on Thursday, Kolanovic pointed to popular retail stocks such as Tesla, Palantir, and Super Micro as potential triggers of a momentum crash. Tesla stock plunged 14% on Thursday as Trump responded to Musk's criticisms of the big GOP tax and budget bill.
Back in February (2/19) drop of $PLTR on dod spending cut started market wide momentum crash. Today, we have several crowded retail names $TSLA $PLTR $SMCI that could start a similar development ...
— Marko Kolanovic (@markoinny) June 5, 2025
However, Kolanovic also noted that the Trump-Musk fight would be one possible catalyst for a market pullback among many. Uncertainty in the economy and the trade war are also looming problems.
"We're close to all-time highs, but we still have all the problems," Kolanovic said. "We have a trade war, we have signs of an economic slowdown."
Valuations are stretched, he said, with the Nasdaq close to record highs even as rates remain elevated, and Kolanovic sees warning signs in the bond market.
The risk-reward tradeoff for stocks versus bonds looks unattractive, as the 10-year Treasury yield hovers around 4.4%. That means equity investors aren't getting a great return in excess of the risk-free rate.
There's also the lingering concern about Fed independence, with Trump repeatedly pressuring Powell to cut interest rates.
Macro risks are mounting as well. Kolanovic pointed to the weak ADP jobs report earlier this week, which reported 37,000 new jobs compared to economists' expectations of 110,000. While the May jobs report showed higher-than-expected job growth, April and March numbers saw significant downward revisions.
A correction could present a potential buying opportunity, but that's only if recession risks dissipate, Kolanovic said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
26 minutes ago
How major US stock indexes fared Friday, 6/6/2025
Stocks rose on Wall Street following a better-than-expected report on the U.S. job market. The S&P 500 climbed 1% Friday, marking its second weekly gain in a row. The Dow Jones Industrial Average added 1%, and the Nasdaq composite rose 1.2%. U.S. employers slowed their hiring last month, but still added a solid 139,000 jobs amid uncertainty over President Donald Trump's trade wars. Lululemon Athletica sank after lowering its profit forecast for the full year. On Friday: The S&P 500 rose 61.06 points, or 1%, to 6,000.36. The Dow Jones Industrial Average rose 443.13 points, or 1%, to 42,762.87. The Nasdaq composite rose 231.50 points, or 1.2%, to 19,529.95. The Russell 2000 index of smaller companies rose 34.89 points, or 1.7%, to 2,132.25. For the week: The S&P 500 is up 88.67 points, or 1.5%. The Dow is up 492.80 points, or 1.2%. The Nasdaq is up 416.19 points, or 2.2%. The Russell 2000 is up 65.96 points, or 3.2%. For the year: The S&P 500 is up 118.73 points, or 2%. The Dow is up 218.65 points, or 0.5%. The Nasdaq is up 219.16 points, or 1.1%. The Russell 2000 is down 97.91 points, or 4.4%.
Yahoo
an hour ago
- Yahoo
Stocks to Watch as May's Jobs Report Beats Economists' Expectations: PCTY, MMS
The broader indexes saw a nice uptick on Friday as May's Jobs report came in better than expected, with the S&P 500 and Nasdaq rising over +1%. Driving the stock market's uptick, U.S. employers added 139,000 jobs, which came in above most economists' expectations of 125,000-130,000, while the unemployment rate remained steady at 4.2%. Also helping to appease tariff uncertainty was that wage growth outpaced inflation, with average hourly earnings rising 3.9% year over year compared to April's latest reading of a 2.3% inflationary uptick (Consumer Price Index). Notably, the next inflation report is set for Wednesday, June 11, when the Fed releases the latest CPI data. That said, here are a few stocks investors will want to consider following May's optimistic jobs report, with payroll stocks being of interest in particular. Image Source: Federal Reserve Economic Data Paylocity PCTY is a cloud-based payroll and human capital management (HCM) software solutions provider to keep an eye on. Notably, Paylocity has continued an impressive streak of surpassing earnings expectations, most recently beating EPS estimates for its fiscal third quarter by 16% in May. Paylocity has now exceeded the Zacks EPS Consensus for 26 consecutive quarters with an average EPS surprise of 15.4% over the last four quarters. Image Source: Zacks Investment Research Meanwhile, government health and human services program provider Maximus MMS is benefiting from a pleasant trend of rising EPS revisions and trades at a very reasonable 10.8X forward earnings multiple. Glamorizing Maximus' attractive P/E valuation, fiscal 2025 and FY26 EPS estimates have risen nearly 7% and 4% in the last 30 days, respectively, with the company blasting earnings expectations for its fiscal second quarter by 47% last month (Q2 EPS of $2.01 versus $1.37 Consensus). Image Source: Zacks Investment Research Other payroll stocks to consider include HCM software providers Dayforce DAY and Paychex PAYX, along with outsourcing company Barrett Business Services BBSI which all land a Zacks Rank #3 (Hold). Furthermore, certain medical and hospitality-related stocks are appealing as May's Jobs report showed job growth was strongest in the healthcare and leisure/hospitality sectors, which added 62,000 and 48,000 jobs, respectively. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Maximus, Inc. (MMS) : Free Stock Analysis Report Paylocity Holding Corporation (PCTY) : Free Stock Analysis Report Paychex, Inc. (PAYX) : Free Stock Analysis Report Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report Dayforce, Inc. (DAY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
Trump responds after Musk's 'Epstein files' allegations
Trump responds after Musk's 'Epstein files' allegations originally appeared on TheStreet. The Trump–Musk feud has officially gone nuclear. Speaking aboard Air Force One on Friday, President Donald Trump said he has 'no plans' to speak with Elon Musk, after a week of fiery online exchanges that began over Trump's proposed 'big beautiful bill' and quickly spiraled into personal jabs and political threats. Trump didn't mince words when asked if he was still in contact with Musk. 'No, I don't,' he said. 'I hope he does well with Tesla, but we're going to take a look at everything. It's a lot of money.' The president's comments come just days after Musk blasted Trump's sweeping tax and spending proposal, calling it a 'disgusting abomination' and warning it would add $2.4 trillion to the U.S. debt. He also replied 'Exactly' to a post suggesting Trump had retaliated against him personally. Musk later floated the idea of launching a new political party, posting, 'It's time for a new party – one that actually represents the people. Not the far left or far right, but the 80% in the middle!' The falling-out marks a sharp turn from their once-friendly dynamic. Trump had recently appointed Musk to lead the Department of Government Efficiency, a symbolic role that ended with modest results. Bitcoin fell sharply after Trump threatened to cut off Elon Musk's government contracts, intensifying their public feud. The uncertainty rattled markets, leading Tesla shares to drop 14% and dragging crypto sentiment down with them. Investors feared a political crackdown on Musk-linked ventures could spill into broader risk assets like Bitcoin. Trump responds after Musk's 'Epstein files' allegations first appeared on TheStreet on Jun 6, 2025 This story was originally reported by TheStreet on Jun 6, 2025, where it first appeared.
