Highlights
The Supreme Court ruling against President Trump's signature tariff policy lifted stocks on Friday although Trump immediately pledged to raise tariffs by other means. The Dow Jones industrial average gained 0.5 percent, the broader S&P 500 rose 0.7 percent and the Nasdaq was up 0.9 percent. US Treasury yields rose while oil prices and the dollar declined.
The initial reaction to the Supreme Court ruling was favorable as business profitability is expected to rise with lower tariffs but the reaction was limited by the expectation of more tariffs and more uncertainty. Risk appetite is also hemmed in by worry over Trump's threat to attack Iran soon. The market also disliked the day's somewhat weak economic reading and higher than expected inflation news.
Among sectors, consumer discretionary, including apparel and retail were among the best performers as they have been hurt as tariffs raise their product costs. US Treasuries sold off on the news, which means longer interest rates rose, because less tariff revenue is expected to mean more Treasury supply to meet higher borrowing needs.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.