Wall Street Responds to Supreme Court Doubts on Tariffs
Wall Street saw a rise in stock prices, but there was a noticeable sell-off in U.S. Treasuries following the Supreme Court’s apparent skepticism regarding President Donald Trump’s broad tariff arguments.
The Dow Jones Industrial Average climbed by 226 points, a rise of 0.5%. The S&P 500 increased by 0.4%, while the Nasdaq Composite saw a gain of 0.7%.
Major indices managed to recover after a decline in technology stocks the previous day. This came after several Supreme Court justices, appointed by Trump, expressed doubts about his use of the International Emergency Economic Powers Act to impose tariffs on U.S. trade partners.
On the prediction market platform Polymarket, the chances of the Supreme Court siding with Trump’s tariffs have drastically dropped to 27%, having briefly surpassed 50% earlier in the morning.
Mizuho’s Daniel O’Regan noted, “Trump’s tariffs have been a significant burden on U.S. companies, and reducing them could enhance profits.” He added that if the act is repealed, the White House might take time to identify new legal approaches to mitigate short-term tariff risks.
O’Regan also mentioned that the Federal Reserve could lower interest rates sooner if tariffs lead to decreased inflation. But, of course, if the administration finds an alternative route for implementing tariffs, it might introduce more uncertainty for businesses.
The yield on two-year bonds rose to 3.63%, and the ten-year bond yield climbed to 4.16%, marking its highest level since October 6. The yield on the 30-year Treasury note jumped to nearly 4.74%, which is the largest single-day increase since July 11.
Andrew Brenner, from NatAlliance Securities, commented, “It was not a good day for U.S. Treasuries.” He pointed out that the day began with ADP numbers coming in higher than expected, and neither the Treasury Department’s quarterly announcements nor a strong services report from the Institute for Supply Management affected the situation. A Supreme Court hearing followed, highlighting the importance of tariff revenue for reducing deficits.
Brenner added, “If that goes through, the next big issue will be government reopening. We will, eventually, see official numbers, but I wouldn’t hold my breath for that soon.”
The S&P 500 has also maintained a position above its 50-day moving average for 131 consecutive business days. This surpasses the previous record of 130 days that ended on March 9, 2011, making it the longest stretch since 149 days that finished on February 26, 2007.
Frank Cappellelli, from the technical analysis firm CappThesis, remarked in Barons that this is yet another indication of the sustainability of the index’s climb. He also noted that there were periods of low volatility in the lead-up to 2011, although the index did fall below its 50-day average at times.
Cappellelli emphasized, “The key thing is how the market copes with intermittent pullbacks. So far, all drawdowns have been bought, which has dampened selling. Each pullback has set the stage for a new bullish pattern, helping to maintain this upward trend.”
