Key Points:
- The Supreme Court ruled 6-3 that President Trump lacked the authority to impose his sweeping tariffs.
- U.S. stock markets surged following the decision, erasing early morning losses.
- Economic growth slowed to 1.4% in the fourth quarter, missing analyst forecasts.
- Core inflation jumped 3.0% over the last year, reducing hopes for quick interest rate cuts.
U.S. stocks climbed on Friday after the Supreme Court delivered a major blow to President Donald Trump’s trade agenda. The court ruled 6 to 3 against the sweeping tariffs Trump imposed last April. In a long-awaited document, the justices declared that the International Emergency Economic Powers Act does not give the president the authority to enforce these taxes on imported goods.
Wall Street celebrated the news. The S&P 500 gained 0.5%, the tech-heavy NASDAQ jumped 0.9%, and the Dow Jones Industrial Average added 0.2%. Markets had opened lower earlier in the day but shot up the moment the court released its opinion. Retailers like Nike and Lululemon stand to benefit from cheaper supply chains, though financial experts warn the government might face billions in refund liabilities.
Before the court ruling, disappointing economic data dragged the market down. The Commerce Department reported that gross domestic product grew by just 1.4% in the fourth quarter, falling far short of the 2.8% target. Meanwhile, core inflation hit 3.0% over the last year, marking the highest reading since late 2023.
This mix of slowing growth and sticky inflation creates a headache for the Federal Reserve. Traders immediately reduced their bets that the central bank will cut interest rates in June. Policymakers now have to balance a cooling economy against rising consumer prices.
Beyond the stock market, investors are watching the private credit sector nervously. Blue Owl Capital just froze redemptions at one of its funds and plans to sell $1.4 billion in assets to cover debts. At the same time, oil prices are heading for a 6% weekly gain. Trump recently warned Iran that “really bad things” will happen if they do not agree to a nuclear deal soon, sparking fears of military action that could disrupt global oil supplies.
