U.S. stock ended higher on Friday, snapping a two-week losing streak, after the Supreme Court struck down President Donald Trump’s imposition of sweeping tariffs in 2025.
The benchmark S&P 500 index added 0.7% to close at 6910.51 points, while the tech-heavy NASDAQ Composite advanced 0.9% to settle at 22886.07 points. The blue-chip Dow Jones Industrial Average rose 0.5% to conclude at 49625.97 points.
The main averages had opened in the red after disappointing readings on inflation and economic growth. They proceeded to claw back some losses and trade mixed, after which they shot up following the Supreme Court’s opinion.
For the week, the S&P gained 1.1%, the Nasdaq was higher by 1.5% and the Dow rose 0.3%.
SCOTUS Strikes down Trump’s tariffs
In a long-awaited opinion, the Supreme Court of the United States on Friday ruled 6 to 3 against Trump’s swathe of sweeping reciprocal tariffs imposed in April last year.
The case, titled Learning Resources, Inc. v. Trump, debates whether the president had the authority to impose his tariffs based on the International Emergency Economic Powers Act (IEEPA).
“IEEPA does not authorize the President to impose tariffs,” the Supreme Court said in a 170 page document.
Trump was critical of the top U.S. court after the ruling, calling it “deeply disappointing” and a “disgrace to our nation” and suggesting that the court had been “swayed by foreign interests.” The president said the tariffs would still remain in place under other statutes, while imposing a new global 10% levy.
SCOTUS in early November had heard oral arguments in the case, and markets had been on the lookout for an opinion ever since. With U.S. importers paying billions of dollars each month in tariffs, the opinion takes on added significance.
In Friday’s opinion, the top U.S. court did not weigh in on whether the government had to issue refunds for tariffs already collected.
“On the heels of the landmark decision by the SCOTUS to strike down Trump’s unprecedented tariffs, markets are understandably dazed and confused as some industries and companies, like Lululemon (NASDAQ:LULU) and Nike (NYSE:NKE), would benefit, while the overall market could suffer in the weeks ahead due to the Treasury’s looming liability in billions of refunds and what that might do to the bond market with rates jumping higher as a result,” Jake Dollarhide, CEO at Longbow Asset Management, say.
According to Keith Lerner, chief investment officer and chief market strategist at Truist, the overall market reaction to the ruling “could ultimately be fairly muted.”
“This wasn’t a major surprise. Going into the decision, prediction markets like Polymarket were implying only about a 25% chance that the Supreme Court would rule in favor of the administration’s tariffs, so much of this was already anticipated,” he say.
“That said, it does add another layer of uncertainty, particularly for businesses navigating trade policy and supply chains. Companies have been adapting to tariff uncertainty for some time, and questions around how previously collected tariffs are handled will be important to watch,” Lerner added.
Key inflation, GDP data underwhelms
Friday’s spotlight had earlier been on PCE price index data for December and preliminary gross domestic product data for the fourth quarter.
The core personal consumption expenditures (PCE) price index – widely seen as the Fed’s preferred inflation gauge – came in hotter than expected on both a M/M and Y/Y basis in the last month of 2025. Core PCE rose 0.4% M/M and 3.0% Y/Y, with the latter reading the highest since November 2023 and well above the central bank’s 2% target.
At the same time, the preliminary estimate for U.S. Q4 GDP growth came in at 1.4%, significantly below the consensus figure of a rise of 2.8%.
According to the CME FedWatch tool, market participants trimmed their expectations of a 25 basis point rate cut by the Fed in June after the release of the data.
“Q4 GDP at just 1.4% confirms the economy slowed more than expected—but it didn’t stall. Growth came in well below forecasts, and while the government shutdown played a role, momentum clearly cooled into year-end,” Gina Bolvin, president of Bolvin Wealth Management Group, said.
“At the same time, PCE inflation running near 3% over 2025 reminds us the Fed’s job isn’t finished. That combination—slower growth with still-sticky inflation—keeps policymakers cautious and markets measured,” Bolvin added.
Private credit jitters
Elsewhere, the private credit markets will be in the spotlight after Blue Owl Capital (NYSE:OWL) said on Thursday it will sell $1.4 billion in assets and freeze redemptions at one of its funds to curb debt and pay back shareholders – a move that sparked concerns over broader credit quality and exposure to recent stock losses.
Concerns have also begun to crop up over how much exposure lenders have to software stocks, which themselves have been under pressure as traders fret over possible disruptions from the emergence of new artificial intelligence models.
Crude set for weekly surge
Oil prices were slightly higher, and were set to snap a two-week losing streak with a solid advance of about 6%, as escalating U.S.-Iran tensions drove worries over a hit to supplies out of the Middle East.
Brent futures were last trading 0.1% higher to $71.71 a barrel, and U.S. West Texas Intermediate crude futures were up marginally to $66.42 a barrel. Both contracts hovered near their highest level since early August.
Tensions remained elevated after Trump on Thursday said “really bad things” would happen if Iran does not come to an agreement regarding a nuclear program within 10-15 days, raising the prospect of military action.
Any escalation involving Iran — a major OPEC producer — could threaten flows through the Strait of Hormuz, a critical chokepoint for roughly a fifth of global oil shipments.