Stocks surged following a federal court’s decision to halt former President Donald Trump‘s tariffs, which had previously sent the S&P 500 into bear market territory early last month. After the ruling, S&P 500 futures jumped 1.1%, an indication that investors were feeling optimistic. The dollar index advanced modestly, as did US crude oil futures, a sign of a generally strong positive sentiment across markets.
The ruling has prompted Trump’s administration to immediately appeal, signaling that he will likely continue to fight for his signature policy despite the court’s decision. The doubt cast by this legal fight is still a major worry for many economists and investors.
Alec Phillips, chief U.S. economist and managing director at investment bank Goldman Sachs, articulated tempered optimism in a recent investor note. While he welcomed the temporary relief the ruling provides, he stressed that the economic pain caused by tariffs remains an ongoing crisis.
Keith Lerner, co-chief investment officer at Truist Advisory Services, noted that the market’s reaction has been encouraging. He agrees the rally could have been much stronger, had the ruling been made much sooner. “This is a positive, but it doesn’t have the same oomph as it may have in early April when the market was down,” he stated.
Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, fielded his insights on the emerging market. He noted that recent gains have been modest due to ongoing uncertainty over Trump’s tariffs. “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,” Hufbauer remarked.
He elaborated that only one unknown has left. The question is not whether Trump will accept the court’s decision but whether he’ll impose tariffs on other grounds using other statutes. “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,” Hufbauer added.
Wall Street has largely moved on from worries over the trade war. New rollbacks, pauses, and backroom deals have since worked to assuage those concerns. The threat of new tariff talks still hangs heavily over economic forecasts.