Tesla Loses $67 Billion in One Day

Wall Street closed lower across the board on Tuesday as investors grappled with a lack of economic data due to the ongoing U.S. government shutdown, now in its seventh consecutive day. With official data pipelines frozen, traders turned to independent reports and central bank commentary to gauge the Federal Reserve’s next move on interest rates.

The absence of clear signals, combined with rising inflation expectations, weighed heavily on tech and growth stocks, with Tesla suffering the steepest single-day loss among mega-cap equities.

Shares of Tesla Inc. (TSLA) fell 4.5% in Tuesday's session, slashing $67 billion from the company’s market capitalization. The drop comes despite the electric vehicle maker’s unveiling of two new, lower-cost versions of its popular Model Y, a move intended to boost sales.

However, analysts and investors expressed concern that these cheaper models could cannibalize sales of existing higher-margin vehicles. Notably, the budget versions lack Tesla’s signature rear-seat touchscreens and do not feature its semi-autonomous driving system. The company also removed LED light bars from the entry-level Model Y trims to reduce production costs.

Elon Musk’s long-standing pledge to deliver a $25,000 electric car appears to have been shelved last year. Instead, the company is opting to repackage existing models at lower prices, a pivot that some see as a short-term strategy that risks long-term brand dilution and slower revenue growth.

The Dow Jones Industrial Average slipped 62 points (-0.2%), marking its second consecutive daily loss.

The S&P 500 fell 0.4%, ending its 7-day winning streak, the longest in five months.

The Nasdaq Composite lost 0.7%, pulling back from its record peak as weakness in tech names deepened.

Stocks linked to cryptocurrency, such as Coinbase and MicroStrategy, also gave up Monday’s gains as Bitcoin pulled back from recent highs.

The session saw elevated trading activity, with volume on U.S. exchanges rising 7% to 20.8 billion shares, well above the 20-session average of 19.4 billion.

A Federal Reserve Bank of New York survey showed a decline in consumer expectations for future economic conditions, alongside a rise in inflation forecasts. The report gained unusual prominence due to the vacuum left by the data blackout caused by the shutdown, itself driven by a partisan deadlock in Congress.

Markets are now left guessing whether the Fed will proceed with a second rate cut this year at its upcoming policy meeting. Without updated labor or inflation figures, speculation is likely to continue driving volatility.