S&P 500 Rises, Markets See Tariff Ruling as Unstable Economic Direction
US stocks rose on Friday (February 20th), while government bonds and the US dollar weakened, after market participants assessed that the Supreme Court's rejection of Donald Trump's tariff plan had more potential to strain government finances than significantly change the economic direction. On Wall Street, more than 330 stocks in the S&P 500 closed higher, indicating that risk-on sentiment persisted.
Trump—who had just been rebuked by the Supreme Court for using emergency powers to impose broad tariffs—said he would impose a 10% global tariff on trading partners, while also asserting that several existing tariff programs would remain in effect. However, uncertainty about the impact on government revenues and the potential for a budget hole kept the dollar and government bonds under pressure.
"The Supreme Court didn't invalidate the tariffs, they just invalidated the special use of the IEEPA," Trump said at the White House, referring to the basis for the emergency powers, which he deemed illegal. He emphasized that he would take a different path and said there was no need to seek Congressional approval because the necessary authority, he said, was already available through other instruments.
Ahead of the ruling, Trump warned that curbing his tariff powers could trigger a 1929-style economic crisis and eliminate “trillions of dollars” that he claimed could help pay off the US public debt. Meanwhile, thousands of companies and importers are expected to prepare for a lengthy legal battle to seek the return of up to $170 billion in tariffs already paid—while the Supreme Court did not specify a refund mechanism in its ruling.
Treasury Secretary Scott Bessent said tariff revenues are expected to be “virtually unchanged” in 2026 regardless of the Supreme Court ruling, as the administration will use other avenues to maintain tariffs—including powers known as Sections 122, 232, and 301. TD Securities also assessed that the US economic outlook does not need to be revised because tariffs are likely to remain in place through different policy avenues.
In the markets, the S&P 500 rose 0.7%, the Nasdaq 100 gained 0.9%, and the Dow Jones Industrial Average rose 0.5% at the close of the New York session. This gain suggests investors remain focused on corporate growth prospects, although uncertainty about tariff policy could potentially keep volatility high in the coming weeks.
Source: Newsmaker.id
