Stocks Rebound as Supreme Court Strikes Down President Trump’s Tariffs

The S&P 500 Index ($SPX) (SPY) today is up +0.58%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.18%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.03%.  March E-mini S&P futures (ESH26) are up +0.60%, and March E-mini Nasdaq futures (NQH26) are up +1.04%.

Stock indexes recovered from early losses and rallied, with the S&P 500 climbing to a 1-week high after the Supreme Court struck down President Trump’s global tariffs.  The Supreme Court said Mr. Trump exceeded his authority by invoking a federal emergency powers law to impose his "reciprocal" tariffs as well as targeted import taxes on countries to address fentanyl trafficking.

Stocks initially moved lower today after the US Q4 GDP grew at a weaker-than-expected pace.  Also, signs of stubborn inflation pressures may keep the Fed from cutting interest rates after the Dec core PCE price index, the Fed's preferred inflation gauge, rose more than expected.  In addition, US manufacturing activity slipped after the Feb S&P manufacturing PMI unexpectedly declined.

Geopolitical risks are also undercutting stocks.  President Trump on Thursday ramped up pressure on Iran to strike a deal over its nuclear program, saying he thought 10 to 15 days was “pretty much” the “maximum” he would allow for negotiations to continue, and “We’re either going to get a deal, or it’s going to be unfortunate for them.” 

US Q4 GDP rose +1.4% (q/q annualized), weaker than expectations of +2.8%.  The Q4 core PCE price index rose +2.7%, stronger than expectations of +2.6%.

US Dec personal spending rose +0.4% m/m, stronger than expectations of +0.3% m/m.  Dec personal income rose +0.3% m/m, right on expectations.

The US Dec core PCE price index (the Fed's preferred inflation gauge) rose +0.4% m/m and +3.0% y/y, stronger than expectations of +0.3% m/m and +2.9% y/y.

The US Feb S&P manufacturing PMI fell -1.2 to 51.2, weaker than expectations of no change at 52.4.

US Dec new home sales fell -1.7% to 745,000, better than expectations of 730,000. 

The University of Michigan US Feb consumer sentiment index was revised lower by -0.7 to 56.6, weaker than expectations of no change at 57.3.

The University of Michigan US Feb 1-year inflation expectations were revised lower to a 13-month low of 3.4% from the previously reported 3.5%. The Feb 5-10 year inflation expectations were revised lower to 3.3% from the previously reported 3.4%.

Q4 earnings season is nearing its end, with more than three-quarters of the S&P 500 companies having reported earnings results.  Earnings have been a positive factor for stocks, with 74% of the 418 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 5% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets are mixed today.  The Euro Stoxx 50 rallied to a new all-time high and is up +0.79%.  China’s Shanghai Composite is closed for the week-long Lunar New Year holidays.  Japan’s Nikkei Stock 225 closed down -1.12%.

Interest Rates

March 10-year T-notes (ZNH6) today are down -4 ticks.  The 10-year T-note yield is up +2.1 bp to 4.088%.  T-notes are slightly lower today after the Dec core PCE price index, the Fed's preferred inflation gauge, rose more than expected, a hawkish factor for Fed policy. T-notes fell to their lows today after the Supreme Court struck down President Trump's global tariffs, as the removal of the tariff revenue will boost the US budget deficit.

Losses in T-notes are limited after Q4 GDP expanded less than expected and the Feb S&P manufacturing PMI unexpectedly declined. Also, the downward revision to the University of Michigan US Feb inflation expectations is supportive for T-notes. 

European government bond yields are moving lower today.  The 10-year German bund yield is down -0.2 bp to 2.740%.  The 10-year UK gilt yield matched a 14-month low of 4.336% and is down -0.7 bp to 4.361%.

Eurozone Feb S&P manufacturing PMI rose +1.3 to 50.8, stronger than expectations of 50.0 and the fastest pace of expansion in 3.5 years.

German Jan PPI fell -3.0% y/y, weaker than expectations of -2.2% y/y and the largest decline in 1.75 years.

UK Feb S&P manufacturing PMI unexpectedly rose +0.2 to 52.0, stronger than expectations of a decline to 51.5 and the highest level in 1.5 years.

UK Jan retail sales excluding auto fuel rose +2.0% m/m, stronger than expectations of +0.3% m/m and the largest increase in 20 months.

Swaps are discounting a 1% chance of a -25 bp rate cut by the ECB at its next policy meeting on March 19.

US Stock Movers

Strength in the Magnificent Seven technology stocks is providing support to the broader market.  Alphabet (GOOGL) is up more than +4%, and Amazon.com (AMZN) is up more than +2%. Also, Nvidia (NVDA) and Meta Platforms (META) are up more than +1%.  In addition, Apple (AAPL) is up +0.82%, Tesla (TSLA) is up +0.34%, and Microsoft (MSFT) is up +0.12%.

Chipmakers and AI-infrastructure stocks are climbing today, lifting the overall market.  Lam Research (LRCX), Western Digital (WDC), and Analog Devices (ADI) are up more than +2%. Also, ARM Holdings (ARM), Micron Technology (MU), ASML Holding NV (ASML), Qualcomm (QCOM), KLA Corp (KLAC), Applied Materials (AMAT), and Broadcom (AVGO) are up more than +1.

Cryptocurrency-exposed stocks are climbing today, with Bitcoin (^BTCUSD) up more than +1%.  Coinbase Global (COIN) is up more than +5%, and Strategy (MSTR) is up more than +3%. Also, Riot Platforms (RIOT) is up more than +2%, and MARA Holdings (MARA) and Galaxy Digital Holdings (GLXY) are up more than +1%.

Shares of asset managers are sliding today after Blue Owl Capital announced it would restrict withdrawals from one of its retail-focused private credit funds.  Blue Owl Capital (OWL) is down more than -3%, adding to Thursday’s -5% decline.  Also, Ares Management (ARES) and Blackstone (BX) are down more than -1%. 

RingCentral (RNG) is up more than +35% after reporting Q4 adjusted EPS of $1.18, better than the consensus of $1.13, and forecasting full-year adjusted EPS of $4.76 to $4.97, stronger than the consensus of $4.73.

Comfort Systems USA (FIX) is up more than +5% after reporting Q4 revenue of $2.65 billion, above the consensus of $2.34 billion.   

Live Nation Entertainment (LYV) is up more than +5% after reporting Q4 revenue of $6.31 billion, stronger than the consensus of $6.11 billion.

Workiva Inc (WK) is up more than +5% after forecasting full-year total revenue of $1.04 billion, above the consensus of $1.02 billion. 

Floor & Decor Holdings (FND) is up more than +4% after reporting Q4 adjusted EPS of 36 cents, better than the consensus of 34 cents. 

GRAIL Inc (GRAL) is down more than -44% after it said its multi-cancer screener failed to meet its primary endpoint of a statistically significant reduction in combined Stage III and IV cancer.

Akamai Technologies (AKAM) is down more than -9% to lead losers in the S&P 500 after forecasting full-year adjusted EPS of $6.20 to $7.20, well below the consensus of $7.35. 

Newmont (NEM) is down more than -4% after forecasting its 2026 gold production will fall about -10% to 5.3 million ounces. 

Copart (CPRT) is down more than -3% to lead losers in the Nasdaq 100 after reporting Q2 revenue of $1.12 billion, weaker than the consensus of $1.17 billion.

Walmart (WMT) is down more than -2% to lead losers in the Dow Jones Industrials after HSBC downgraded the stock to hold from buy.

Earnings Reports(2/20/2026)

Anglogold Ashanti Plc (AU), Esab Corp (ESAB), Lamar Advertising Co (LAMR), PPL Corp (PPL), Western Union Co/The (WU).