Wall Street kicked off Q3 with fireworks, as the S&P 500 and Dow Jones bounced back into the green on Tuesday, following the U.S. Senate’s passage of President Trump’s sweeping tax and spending bill.
While markets initially stumbled, they reversed sharply after the announcement, highlighting just how tightly investors are tying stock gains to policy stimulus, even as long-term concerns mount.
After a morning dip on July 1, 2025, the S&P 500 crept up 0.02% to close at 6,205.98, while the Dow Jones soared nearly 434 points, or 0.98%, to 44,528.67, just shy of its all-time high.
The Nasdaq, meanwhile, lost some steam, slipping 0.55% on a Tesla-led tech drag.
Investors cheered the Senate’s approval of Trump’s multi-trillion-dollar tax and spending package, which could inject a fresh dose of fuel into an economy already humming along. The package is now headed back to the House for final clearance.
“The markets are preparing for a boatload of stimulus with an already healthy economy, which makes it even more confusing,” said Rich Bernstein of Richard Bernstein Advisors.
And that’s the tension: Will this flood of fiscal support spark even more growth, or just higher inflation and debt risk down the line?
Traders are betting the former, at least for now. Healthcare giants like UnitedHealth and Amgen pushed the Dow higher, while casino stocks surged on stronger-than-expected revenue out of Macau. Wynn Resorts and Las Vegas Sands both jumped 8.4%, with MGM up 7.3%.
Not everyone was celebrating, though. Tesla stock slid 4.5%, as the Trump–Musk feud reignited. Musk criticized Trump’s tax policy, prompting Trump to threaten federal subsidies for Musk-led companies, putting Tesla (and possibly SpaceX) in the political crosshairs.
That spat weighed heavily on the Nasdaq and may spook investors watching for policy retribution.
Investors are embracing the short-term sugar rush from Trump’s tax cuts, pushing the S&P and Dow higher despite early jitters. But the conflicting signals, strong job data, rising yields, political feuds, and policy uncertainty suggest that this is anything but calm.
