Skeptical Supreme Court Helps Fuel a Market Bounce
The tariff issue is powerful and could have a significant impact if the ruling goes against Trump.
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A slow bounce on Wednesday morning gained traction when a skeptical Supreme Court questioned participants in a hearing on President Trump’s constitutional power to impose tariffs. Centrist justices asked some tough questions, sparking speculation that it could rule against Trump.
Stocks most impacted by tariffs led the bounce, with retailers and auto companies doing well. While there is already speculation about possible workarounds for the Trump administration, such a move would create tremendous chaos and unleash a burst of free trade. That would have a very positive short-term economic impact, but it would also have a host of other consequences.
Late in the day, Jamie Dimon, CEO of JPMorgan Chase (JPM) , made several negative comments, stating that we will have a recession with a credit effect, but the timing is unclear. Dimon has been a bear for a while and is concerned about both asset prices and bad loans. The nervous market took them more seriously this time, which led to some selling in the last few minutes of trading.
In addition, there was late-breaking news that OpenAI is seeking a federal guarantee for its data-center investments, which was unexpected and will fuel further speculation about the profitability of AI.
Overall, it was a solid day, with over 65% of stocks gaining and the Russell 2000 (IWM) recovering all its losses from Tuesday. The Nasdaq 100 (QQQ) bounced 0.8% but didn’t even recover half of its losses.
The question now is whether this is just a little relief bounce that will help build some support or a trap for overanxious bulls. The lows hit on Tuesday at the close are now the key levels. If those levels hold, we are in good shape, but if they are breached, it is likely to trigger another round of selling.
It is far too early to declare that the worst is over, but the tariff issue is powerful and could have a significant market impact if the Supreme Court rules against Trump.
Have a good evening. I’ll see you Thursday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
