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A trader works on the floor of the New York Stock Exchange. (Timothy A. Clary/AFP/Getty Images via CNN Newsource)
By David Goldman, John Towfighi and Alicia Wallace, CNN
New York (CNN) — Stocks were mixed Thursday after a federal court ruled late Wednesday that President Donald Trump overstepped his authority to impose sweeping tariffs, throwing into chaos the administration’s core trade policy that has threatened to raise prices for businesses and slow the economy.
Investors initially cheered, but not overwhelmingly — and a morning rally lost steam on Thursday as investors assessed the potential outcome for Trump’s tariffs.
The Dow was down 240 points, or 0.58%, Thursday midday. The S&P 500 slid 0.2% and the tech-heavy Nasdaq Composite hovered around the flatline. Stocks received a boost from Nvidia’s strong earnings Wednesday, but the rally faded amid trade war uncertainty.
Gains were muted because the fate of Trump’s tariffs remains unclear. The White House immediately appealed, so the ruling may ultimately be overturned. A number of Wall Street analysts also suggested the White House could simply reclassify some of its sweeping tariffs under a different law that was not challenged in the court ruling.
“The Trump administration has other authorities it can use to impose tariffs similar to those the court struck down,” noted Alec Phillips, managing director at Goldman Sachs, in a note to investors.
Wall Street had largely moved beyond the trade war after a number of rollbacks, pauses and deals had taken much of the sting out of the tariffs that at one point early last month sent the S&P 500 into bear market territory before rallying.
“This is a positive, but it doesn’t have the same oomph as it may have in early April when the market was down,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “Investors have already been pricing in less concern about tariffs. A month ago, we might have seen a 1,000-point rally on this.”
Many stocks that had been particularly hit hard by tariffs bounced back in premarket trading before wavering during the day. Apple, Target, Nike and Crocs all rose in early hours before sliding into the red during regular trading hours.
Some traditional safe haven assets, including US Treasury bonds and gold, rallied on Thursday as investors embraced a risk-off attitude. The dollar and US crude oil fell.
And some Wall Street analysts cautioned that investors shouldn’t get too excited: The economic pain caused by tariffs remains, and Trump will almost certainly fight to maintain his signature policy.
“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,” said Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics. “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.”
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