To The Moon

Stocks rose Friday after the Supreme Court of the United States delivered a 6–3 decision striking down President Donald Trump’s tariffs.

Supreme Court of the United States

However, the celebration may be short-lived. Within hours, the White House introduced a new 10% global tariff under a different legal authority, reigniting trade uncertainty…

For the week:

• Dow Jones Industrial Average: +0.25%

• $S&P 500(.SPX)$ : +1.1%

• $NASDAQ(.IXIC)$ : +1.5%

• Hot Stock: $Corning(GLW)$ (+7.3%) Biggest Loser: $Akamai(AKAM)$ (-14.1%)

• Best Sector: Communication Services (+2.7%) Worst Sector: Energy (-0.7%)

All three major indexes finished higher on Friday.

Why Markets Initially Celebrated

The ruling removed a lingering overhang that had weighed on sentiment. Many investors had anticipated the decision based on oral arguments, but its formal confirmation provided clarity.

Strategists noted potential benefits:

• Reduced tariff-related inflation pressure

• Less near-term strain on consumer prices

• A possible easing factor for the Federal Reserve

Tariffs had only recently begun filtering into pricing data, meaning their removal could modestly improve the inflation outlook.

Why Trade Uncertainty Isn’t Over

The decision left major questions unanswered:

• How and when corporations will be refunded roughly $130 billion in collected tariffs

• Whether import customs procedures will change quickly

• How new tariffs will reshape the legal landscape

Crucially, Trump announced he will implement a new 10% global tariff using Section 122 of the 1974 Trade Act-a move economists say is on firmer legal footing, though more restrictive.

If these tariffs expire in July without congressional extension, the administration could pivot toward broader measures under Sections 232 and 301 after completing required investigations.

That sets up what could become Round Two of a prolonged legal battle over trade policy and potential corporate refunds.

Inflation Still Sticky: Core PCE Accelerates

While tariffs dominated headlines, key economic data also moved markets.

The core Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, rose:

• 0.4% month over month in December

• 3.0% year over year

That reading matched expectations but reinforced concerns that inflation remains stubborn.

Minutes from the January meeting of the Federal Open Market Committee earlier this week showed officials maintaining a high bar for rate cuts in 2026.

Tariffs may have contributed to rising core goods prices. If the court ruling ultimately reduces those pressures, it could provide marginal relief, but inflation remains elevated.

GDP Slows More Than Expected

At the same time, U.S. economic growth cooled.

Fourth-quarter GDP expanded at an annualized 1.4%, below the 1.9% consensus forecast. The slowdown was partly attributed to the government shutdown, creates a challenging backdrop for policymakers…

The combination of:

• Slower growth

• Sticky inflation

• Ongoing trade uncertainty

For now, markets appear to believe the Federal Reserve is likely to remain on hold.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.

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