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Tesla shares fall as Musk-Trump spat restarts

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Powell's doesn't rule out July cut

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U.S. manufacturing contracts, job market shows mixed

signals

(Updates with open of US markets)

By Chuck Mikolajczak

NEW YORK, July 1 (Reuters) - Global shares edged lower

and the dollar was lower for a ninth straight session on

Tuesday, as investors digested a flurry of U.S. economic data

and comments from Federal Reserve Chair Jerome Powell to gauge

the timing of any interest rate cuts.

Powell, speaking at a central banking conference in Sintra,

Portugal, said he could not say if July was too early for a rate

cut, but it "is going to depend on the data, and we are going

meeting by meeting".

Market expectations for a July cut inched up to 21.2% from

18.6% in the prior session, according to CME's FedWatch Tool.

On Wall Street, the Dow advanced but the S&P 500 and Nasdaq

retreated from record levels weighed down by a drop of more than

5% in Tesla after U.S. President Donald Trump

threatened to cut off the billions of dollars in subsidies that

Elon Musk's companies receive from the federal government.

The Dow Jones Industrial Average rose 227.77 points,

or 0.52%, to 44,322.06, the S&P 500 fell 19.78 points, or

0.32%, to 6,185.17 and the Nasdaq Composite fell 181.49

points, or 0.89%, to 20,190.00.

MSCI's gauge of stocks across the globe fell

1.69 points, or 0.18%, to 916.20 while the pan-European STOXX

600 index fell 0.3% as concerns over the impact of

tariffs on global growth were rekindled as a July 9 deadline by

Trump draws closer.

On the economic front, U.S. data showed manufacturing

remained in contraction territory in June, according to the

Institute for Supply Management (ISM).

In the first reading of the week on the labor market, the

Job Openings and Labor Turnover Survey, or JOLTS report, showed

openings were up 374,000 to 7.769 million by the last day of

May, but a decline in hiring indicated the market may have

slowed.

"Despite a large jump in job openings in May, the economy

continues to be stuck in Powell's 'no hire, no fire'

equilibrium," said Brian Jacobsen, chief economist at Annex

Wealth Management in Menomonee Falls, Wisconsin.

"It's not a stable equilibrium and considering the ISM

Manufacturing data, things may tilt towards a weaker job market

over the summer."

Investors will closely watch Thursday's key government

payrolls report, expected a day earlier than usual due to the

Independence Day holiday on July 4, to help shape expectations

for rate cuts from the Fed.

U.S. Treasury yields reversed course and turned higher after

the data, with the yield on benchmark U.S. 10-year notes

up 2.9 basis points to 4.255%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

rose 4.3 basis points to 3.764%.

Markets were also awaiting a resolution to Trump's tax-cut

and spending legislation, which U.S. Senate Republicans were

struggling to pass.

The dollar index, which measures the greenback

against a basket of currencies and is coming off its biggest

first half drop since 1973, rose 0.09% to 96.85, with the euro

down 0.08% at $1.1776. Sterling weakened 0.17% to

$1.3709.

Against the Japanese yen, the dollar weakened 0.34%

to 143.52. Earlier readings from the Bank of Japan's tankan

index of business sentiment indicated the biggest economies in

the region were probably weathering the tariff storm for now,

while a separate private sector survey showed the country's

manufacturing sector expanded in June for the first time in 13

months.

U.S. crude rose 0.48% to $65.42 a barrel and Brent

rose to $66.92 per barrel, up 0.27% on the day.