Stocks were mixed Thursday after a federal court ruled late Wednesday that President Donald Trump overstepped his authority to impose sweeping tariffs, throwing into chaos the administration’s core trade policy that has threatened to raise prices for businesses and slow the economy.
Investors cheered — but not overwhelmingly.
The Dow opened higher but hovered around the flatline Thursday morning. The S&P 500 rose 0.25% and the tech-heavy Nasdaq Composite gained 0.4%, boosted by Nvidia’s strong earnings Wednesday.
Gains were somewhat muted because the fate of Trump’s tariffs remains unclear. Trump’s administration immediately appealed, so the ruling may ultimately be overturned. A number of Wall Street analysts also suggested the White House could simply reclassify some of its sweeping tariffs under a different law that was not challenged in the court ruling.
“The Trump administration has other authorities it can use to impose tariffs similar to those the court struck down,” noted Alec Phillips, managing director at Goldman Sachs, in a note to investors.
Wall Street had largely moved beyond the trade war after a number of rollbacks, pauses and deals had taken much of the sting out of the tariffs that at one point early last month sent the S&P 500 into bear market territory before rallying.
“This is a positive, but it doesn’t have the same oomph as it may have in early April when the market was down,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “Investors have already been pricing in less concern about tariffs. A month ago, we might have seen a 1,000-point rally on this.”
Many stocks that had been particularly hit hard by tariffs bounced back. Apple, Target, Nike, Crocs, Wayfair and RH all rose between 1% and 4%.
Some traditional safe haven assets, including US Treasury bonds and gold, sold off somewhat as part of Thursday’s relief rally. The dollar gained somewhat, as did US crude oil.
But some Wall Street analysts cautioned that investors shouldn’t get too excited: The economic pain caused by tariffs remains, and Trump will almost certainly fight to maintain his signature policy.
“While Wednesday’s ruling may lift markets and the spirits of businesses and consumers concerned about the negative effects of tariffs, the uncertainty that’s starting to weigh on the economy isn’t going away,” said Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics. “The uncertainty is only over if Trump does his own surprise and accepts the decision and does not come in with tariffs under these other statutes, and I’m not giving that much credence.”
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