Topline stocks staged a surprising comeback on Friday, yet they still closed out a challenging February. The market's initial post-election surge began to falter as investors grappled with their confidence in President Donald Trump's economic policies. Notably, Tesla, the electric vehicle company helmed by Trump’s close associate Elon Musk, was at the forefront of this market pullback.
Wall Street initially reacted with optimism following Trump's election victory. This post-election rally prompted Jeremy Siegel, a distinguished professor at the Wharton School of the University of Pennsylvania, to label Trump as the “most pro-stock market president” in history. However, this early enthusiasm has started to fade as investors have begun to scrutinize the volatility surrounding Trump's primary economic strategies, particularly his aggressive tariff policies.
In a note to clients, Bank of America economists Gabriel and Irigoyen expressed concerns, stating, “Trumponomics 2.0 has brought a lot of uncertainty and confusion to the table.” This uncertainty is particularly detrimental to financial models and the stock market, as uncertainty is often viewed as a major hindrance to investment.
Tesla emerged as the most significant loser among the approximately 100 U.S. public companies valued at $100 billion or more, plummeting by 28% throughout February. This decline erased nearly $350 billion in market capitalization and raised questions about whether Musk's controversial role in the White House would negatively affect Tesla's sales.
On Friday, Tesla shares dipped 1% at the market's opening, hitting their lowest intraday price since Election Day. However, they managed to reverse this trend, ending the day with a 4% gain. Currently, Tesla's stock price stands around 40% lower than its all-time high reached in December, following a surge in investor interest after Trump's election. February marks Tesla's second-worst month since its public offering in 2010, trailing only December 2022’s staggering 37% loss.
In February alone, Elon Musk saw his net worth plummet by approximately $63 billion, dropping from $422 billion to $359 billion, according to Forbes calculations. Despite this significant loss, Musk retains his position as the richest person globally, maintaining a lead of about $130 billion over the next wealthiest individual, Mark Zuckerberg, co-founder of Facebook.
In a parallel trend, the world’s largest cryptocurrency, Bitcoin, faced a significant downturn. Following a substantial rally after Trump's election, Bitcoin's fortunes have waned in recent weeks. On Friday, it fell below $80,000 for the first time since November 10, marking a 25% decline from its all-time high set last month. By late afternoon, Bitcoin recovered slightly to around $84,000.
Despite the current turmoil, David Lefkowitz, UBS Wealth Management’s chief U.S. equity strategist, remains optimistic. In a letter to clients, he stated, “We don’t think the Trump administration will take measures that have long-lasting negative impacts on economic growth or inflation. That is certainly not a winning political strategy.” Lefkowitz continues to forecast a more than 10% increase for the S&P 500 by the end of the year.
The stock market's performance in February has been challenging, with Tesla and Bitcoin experiencing notable declines amid investor uncertainty regarding Trump's economic policies. As market dynamics continue to evolve, the implications for both individual investors and the broader economy remain to be seen.
