Levy-tation. The Supreme Court’s 6-3 decision to strike down President Donald Trump’s tariffs boosted stocks on Friday. The ruling in many ways left more questions than answers, however, especially as the White House immediately introduced new 10% global tariffs.

For the week, the Dow Jones Industrial Average added 0.25% while the S&P 500 rose 1.1% and the Nasdaq Composite gained 1.5%. All three indexes ended higher Friday.

On the one hand, the tariff ruling was good news. Markets were largely anticipating the decision, given how oral arguments in the case had played out, and it removed an ongoing overhang that had been lurking in the background. In addition, it “may prove good news for inflation and the Fed because tariffs were just starting to trickle through to prices,” as David Russell, Global Head of Market Strategy at TradeStation noted.

However, the issue is anything but settled. As expected, the Supreme Court didn’t touch the hot potato of how or when corporations might be refunded for some $130 billion in tariffs covered by the ruling, and for now businesses will keep paying them, given a murky timeline for changes to import customs. 

More to the point, Trump condemned the ruling just hours after the news and said he will impose a 10% global tariff under a different authority in Section 122 of the 1974 Trade Act, in addition to existing levies. 

That shift puts Trump on “much safer legal ground now,” even if Section 122 is more restrictive, notes Capital Economics’ Chief North America Economist Paul Ashworth.

It also puts Trump on a deadline, since even some Republicans have recently sided with Democrats in recent tariff votes, meaning Congress is unlikely to vote to extend these tariffs after they expire in July. At that point “the administration will be in a position to ramp up the Section 232 and 301 tariffs instead, after completing the necessary investigations,” Ashworth writes. With no comments from the White House as to how companies might be repaid for the billions of dollars of illegally collected tariffs, he anticipates “another long legal fight over those refunds.”

Get ready for Round 2, coming soon to a court near you.

The Hot Stock: Corning +7.3%
The Biggest Loser: Akamai Technologies -14.1%

Best Sector: Communication Services +2.7%
Worst Sector: Energy -0.7%

Tariffs understandably grabbed headlines this morning, but before the decision came down there were two key pieces of economic data that got lost in the shuffle. They’re worth examining.

First, the Federal Reserve’s core personal consumption expenditures price index, which excludes food and energy prices, picked up steam to end 2025, rising 0.4% in December from the prior month and up 3.0% from a year earlier.

That was in line with analyst estimates. And in fairness, “tariffs are clearly playing a role in boosting core goods prices,” as 22V Research’s Peter Williams noted, meaning that there could be marginal easing from today’s ruling. Nonetheless, it’s not ideal for consumers or interest-rate reductions, particularly after the Fed’s January meeting minutes released earlier this week showed officials setting a high bar for 2026 cuts.

At the same time, gross domestic product growth slowed more than expected in the fourth quarter, hurt by the government shutdown. The U.S. economy expanded at an annualized rate of 1.4%, according to data out Friday morning, below the 1.9% consensus expectations.

“A cooling economy and sticky inflation wasn’t the combination the markets were looking for, but that’s what they got from this morning’s data,” noted Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “The fact that the government shutdown played a big role in the GDP miss should ease concerns of a repeat in the first quarter. Coupled with higher-than-expected inflation, it should keep the Fed on hold.”

Without the tariff ruling, those data points likely would have been bigger news, although perhaps they would not have done much to boost stocks.

Diamondback Energy, Dominion Energy, Domino’s Pizza, Erie Indemnity, Keysight Technologies, Oneok, and Viper Energy announce quarterly results.
—Dan Lam

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Write to Teresa Rivas at teresa.rivas@barrons.com