NEW YORK (AP) — A big rally for stocks that began in Asia on Thursday lost steam after sweeping into Europe and the United States amid uncertainty about what will happen next after a U.S. court blocked many of President Donald Trump’s sweeping tariffs.
The S&P 500 rose 0.4% after giving up more than half of an early gain. The Dow Jones Industrial Average added 117 points, or 0.3%, and the Nasdaq composite rose 0.4%.
It’s a downshift after stocks initially leaped nearly 2% in Tokyo and Seoul, where markets had the first chance to react to the ruling late Wednesday by the U.S. Court of International Trade. The court said that the 1977 International Emergency Economic Powers Act that Trump cited for ordering massive increases in taxes on imports from around the world does not authorize the use of tariffs.
The ruling at first raised hopes in financial markets that a hamstrung Trump would not be able to drive the economy into a recession with his tariffs, which had threatened to grind down on global trade and raise prices for consumers already sick of high inflation. Trump has said he wants to bring manufacturing jobs back to the United States, and he warned the process could cause some pain for U.S. households.
But the tariffs remain in place for now while the White House appeals the ruling, and the ultimate outcome is still 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.
Such uncertainty helped dampen the excitement in financial markets as trading headed through Europe into the United States, where the moves were much more modest than in Asia. The U.S. court’s move was nevertheless seen as a positive for financial markets.
“The bar is raised for President Trump to resurrect his tariffs,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“Markets are pricing that this is a better type of uncertainty than what we’ve had since Liberation Day,” which is what Trump called his April 2 announcement of a worldwide set of sweeping tariffs.
The S&P 500 has pulled within 3.8% of its all-time high after dropping roughly 20% below at one point last month.
On Wall Street, tech stocks led the way after Nvidia once again topped analysts’ expectations for profit and revenue in the latest quarter.
