US Stocks Climb Following Court Ruling on Trump’s Tariff

US stock markets experienced a notable rise on Thursday following a federal court ruling that President Donald Trump had exceeded his authority in implementing extensive tariffs under emergency powers. This decision has provided much-needed relief to investors who have been unsettled by ongoing trade uncertainties. Additionally, strong earnings from chipmaker Nvidia significantly boosted technology stocks, leading the Nasdaq to outperform other indices.

Market Reactions to Court Ruling

Wall Street opened on a positive note, with the S&P 500 climbing 0.8% in early trading. The Nasdaq Composite saw an impressive increase of 1.4%, primarily driven by gains in technology stocks. Nvidia, a leading chipmaker, exceeded quarterly earnings expectations, which contributed to the overall market enthusiasm. The Dow Jones Industrial Average also saw a modest rise, gaining 64 points or 0.1%. The positive sentiment was echoed in Asian markets, which reacted for the first time to the late-Wednesday ruling by the US Court of International Trade in New York. Japan’s Nikkei 225 index surged by 1.9%, while South Korea’s Kospi matched this gain. Other notable increases included Hong Kong’s Hang Seng, which rose 1.3%, and Shanghai’s Composite Index, which added 0.7%.

Implications of the Court’s Decision

The court’s ruling stated that the 1977 International Emergency Economic Powers Act (IEEPA), which Trump cited as the legal basis for imposing tariffs, does not grant the president such sweeping authority. In response, the White House has appealed the decision, leaving uncertainty about whether the administration will comply during the legal proceedings. Stephen Innes of SPI Asset Management described the ruling as a temporary relief, suggesting that it may only be a brief pause before further developments in the tariff saga. Despite the ongoing legal uncertainties, investors appeared optimistic about the potential for reduced trade tensions, which could positively impact the market.

Nvidia’s Strong Performance and Broader Market Trends

Nvidia’s robust quarterly results played a significant role in the market rally, with its shares rising by 6% in after-hours trading. Other tech stocks also benefited, with Broadcom and Advanced Micro Devices each gaining 3.1%, while Super Micro Computer jumped 4%. Major companies like Apple and Amazon saw their stock prices increase by approximately 2.5%. Nvidia, known for its leadership in chip manufacturing and artificial intelligence, had previously faced volatility due to the ongoing tariff disputes, which had dampened its stock performance earlier in the year. In Europe, markets also responded positively, with Germany’s DAX rising by 0.4%, France’s CAC 40 increasing by 0.8%, and the UK’s FTSE 100 remaining stable.

Economic Indicators and Future Outlook

In other economic news, the US economy contracted at an annualized rate of 0.2% in the first quarter of 2025, marking the first quarterly decline in three years. This contraction was largely attributed to a significant 42.6% surge in imports as companies rushed to stockpile foreign goods in anticipation of tariffs. This spike in imports had a substantial negative impact on GDP, subtracting over five percentage points. Consumer spending also showed signs of weakness. Analysts expect that the drag from imports will lessen in the upcoming quarter, potentially allowing GDP to rebound. The final GDP estimate for the first quarter is scheduled for release on June 26. Meanwhile, US benchmark crude oil prices saw a slight increase, with crude rising by 32 cents to $62.16 a barrel, while Brent crude gained 26 cents to reach $64.58. The 10-year Treasury yield also edged up to 4.52% from 4.47%.

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