Stocks rise after U.S. trade court blocks Trump’s emergency tariffs

Stocks are up on Thursday following an early morning boost after a U.S. court blocked many of President Donald Trump’s sweeping tariffs. But the gains got less strong as trading progressed from Asia to New York.

The S&P 500 rose 26 points, or 0.5% as of 1:03 p.m. EST. The Dow Jones Industrial Average was up 26 points, or 0.06%, the Nasdaq composite was .6% higher.

“Investors are keeping their enthusiasm in check for a variety of reasons,” Adam Crisafulli, head of Vital Knowledge, said in a research. “To start, the tariff drama isn’t over – Trump has other legal avenues to pursue an aggressive tariff agenda, and investors expect he will utilize them. In addition, the popularity of the “TACO Trade” perspective has caused the tariff narrative to ease dramatically in the last couple of weeks, to the point where many people already assumed the overall burden won’t be much worse than the 10% baseline when all is said and done,” he said. 

Gains were bigger in Asia, where markets had the first chance to react to the ruling issued late on Wednesday by the U.S. Court of International Trade in New York. It said that the 1977 International Emergency Economic Powers Act that Trump cited for ordering massive increases in taxes on imports worldwide does not authorize the use of tariffs.

Tariff threat still “very real”

The White House immediately appealed, and the long-term outcome of legal disputes over tariffs remains uncertain. The court’s ruling also affects only some of Trump’s tariffs, not those on foreign steel, aluminum and autos, which were invoked under a different law.

Trump “is still able to impose significant and wide-ranging tariffs over the longer-term through other means,” according to Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management.

That uncertainty helped dampen the excitement in financial markets as trading headed through Europe into the United States, where the gains were more modest. 

“Yesterday’s U.S. court ruling has added yet more uncertainty to the EU-US trade relationship and at face value has weakened President Trump’s position. But the risk of tariffs remains very real,” John Higgins, chief market economist with Capital Economics, said in a report.

Until the appeal is resolved, there will also be some added level of uncertainty for U.S. businesses, some economists said on Thursday. 

The trade court’s decision “to suspend newly imposed tariffs on China, Canada, and Mexico, along with the universal 10% duties, “offers potential short-term tariff relief,” but also “introduces greater ambiguity around the future direction of U.S. trade policy, particularly as the ruling faces appeal,” Gregory Daco, EY chief Economist, said in a research note.

On Wall Street, tech stocks led the way after Nvidia once again topped analysts’ expectations for profit and revenue in the latest quarter.

The chip company has grown into one of the U.S. stock market’s largest and most influential stocks because of the frenzy around artificial-intelligence technology, and its 5.9% rise was the strongest force by far moving the S&P 500 upward.

C3ai, an AI application software company, jumped 25.6% after it reported stronger profit than analysts expected for its latest quarter, while also saying the U.S. Air Force increased the top end of the range for how much its contract could be worth by $350 million to $450 million. Its total revenue grew to $108.7 million last quarter.

In the bond market, Treasury yields were holding relatively steady following some mixed reports on the economy. One said that the U.S. economy likely shrunk by less in the first three months of the year than earlier estimated. Another said slightly more U.S. workers applied for unemployment benefits last week than economists expected.

The yield on the 10-year Treasury eased to 4.45% from 4.47% late Wednesday. The two-year Treasury yield, which moves more closely with expectations for where the Federal Reserve will take overnight interest rates, was holding at 3.96%, where it was late Wednesday.

The moves in Europe were more muted. France’s CAC 40 rose 0.3%, and Germany’s DAX was close to flat.

___

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.