NEW YORK (Reuters) -The rift between President Donald Trump and Tesla chief Elon Musk has captivated the world as a political drama, but it has also become a Wall Street spectacle, highlighting the risk to equity markets from the world's biggest stocks.

Tesla shares slid 14% on Thursday as Musk and Trump feuded largely on social media, including the president threatening to cut off government contracts to Musk's companies.

Although the stock modestly rebounded on Friday, Thursday's decline dragged down some of the most closely followed equity indexes, which are more heavily influenced by companies with the largest market values.

Tesla's fall accounted for about half of Thursday's declines for both the S&P 500 and the Nasdaq 100, which fell 0.5% and 0.8% respectively, on the day.

The S&P 500 is generally considered the benchmark for the U.S. stock market while the tech-heavy Nasdaq 100 is the basis for the Invesco QQQ Trust, one of the most popular exchange-traded funds.

"It's a widely held stock," said Robert Pavlik, senior portfolio manager at Dakota Wealth. "When this big-name company that represents a sizable portion of the index sells off, it has an overall effect on the index, but it also has a psychological effect on investors."

Tesla's decline points to the risk that many investors have long warned about, of indexes being heavily influenced by a handful of megacap stocks. Tesla is the smallest by market value of a group of massive tech and growth companies known as the "Magnificent Seven," which overall drove equity index gains in 2023 and 2024. The group has had a rockier 2025 so far, but more recently has been rebounding.

The Magnificent Seven, which include Apple ( AAPL ), Microsoft ( MSFT ) and Nvidia ( NVDA ), had a combined weight of nearly one-third in the S&P 500 overall as of Thursday's close.

"If you're an investor and you own the S&P or the Nasdaq 100 ... you just need to be aware that you own a lot of exposure to a very small cohort of names," said Todd Sohn, ETF and technical strategist at Strategas.

Tesla's decline on Thursday knocked about $150 billion off its market value, while its weights in the S&P 500 and Nasdaq 100 stood at 1.6% and 2.6%, respectively.

Tesla shares rebounded somewhat on Friday, up about 5% in mid-day trade, putting its market value around $970 billion. Microsoft ( MSFT ) and Nvidia ( NVDA ), whose market values exceed $3 trillion, held weights of 6.9% and 6.8% in the S&P 500 as of Thursday.

Tesla shares are down some 37% since mid-December, a period that has seen the S&P 500 fall about 1%, meaning its influence in the index has also declined over that time.

The shares hold a broad influence among ETFs. Tesla has a varying presence in about 10% of the total universe of about 4,200 ETFs, according to Sohn.

Those include the Consumer Discretionary Select Sector SPDR Fund ( XLY ), which sank 2.5% on Thursday, and the Roundhill Magnificent Seven ETF, which dropped 2.6%.

"It's very important to know holistically what is in all your ETFs, because a lot of them are overlapping," Sohn said.