From Bloomberg, January 8:
An upcoming Supreme Court ruling on the legality of the sweeping tariffs that President Donald Trump rolled out in April, briefly sending shockwaves through markets, looms as one of the next big tests for US stocks and bonds.
The equity market has extended its rise into the new year, with the S&P 500 Index hovering near a record. The advance, which has left the benchmark about 40% above its April lows, has been fanned by the artificial-intelligence boom and Trump’s decision to dial back some of his most draconian tariffs. Treasury yields have also come down from their mid-2025 peaks as traders bet the Federal Reserve will keep cutting rates while the economy cools.
If the nation’s top court says Trump exceeded his power with the blanket tariffs on countries around the globe, there will still be significant longer-term uncertainty, given that the White House could seek to re-impose similar levies by invoking different legal authority.
But analysts and investors say the immediate market reaction appears somewhat more predictable. A ruling striking down the tariffs would likely give a boost to stocks by promising to improve profit margins and remove a burden on consumers. At the same time, Treasuries may come under pressure as that potential stimulus complicates the outlook for the Fed’s rate-cut path and threatens to worsen the government’s budget deficit.
Wall Street may get an answer as soon as this week. The court has scheduled Friday as an opinion day, indicating that it will be the first chance for a ruling.
Read More: Trump’s Options If Supreme Court Says His Tariffs Are Illegal
Tailwind for Stocks
Overall, a ruling against the tariffs would boost the earnings of companies in the S&P 500, before interest and taxes, by 2.4% in 2026 over last year’s levels, Wells Fargo & Co. Chief Equity Strategist Ohsung Kwon previously estimated. That would likely drive investors to push up prices to reflect higher profits if the Supreme Court rules against Trump. James St. Aubin, chief investment officer at Ocean Park Asset Management, said that would be “a catalyst for a little bit of a rally.”
Higher Profits Await if Tariffs Struck Down....
....MUCH MORE
Probably best to fade any equity reaction move, whether it be up or down.
