Stocks Rise Anew, Bonds Fall on Trump Tariff Talk: Markets Wrap

(Bloomberg) — Stocks advanced while bonds and the dollar slipped as traders deemed the rejection of Donald Trump’s tariff program to be a potential stress on government finances that is unlikely to change the economy’s course.

After a brief drop, the S&P 500 bounced. The president, rebuked by Supreme Court justices earlier in his bid to impose far-reaching tariffs, said he’ll impose a 10% global levy on trading partners, and claimed that various categories of his existing program remain in place. Still, uncertainties about any potential budget shortfall kept a lid on the greenback and Treasuries.

“The Supreme Court did not overrule tariffs, they merely overruled a particular use of IEEPA tariffs,” Trump told reporters Friday, referencing the emergency authorities that the high court found illegal. “Now I’m going to go in a different direction, probably the direction that I should have gone the first time.”

Asked if he would go to Congress, Trump said “I don’t need to” because the authorities he’s seeking are already approved.

Ahead of the ruling, he warned that curtailing his tariffing power would mean forgoing trillions of dollars that could help pay off America’s huge public debt.

Thousands of companies and importers are set to launch what could be a prolonged battle to try to recoup as much as $170 billion in tariffs they’ve already paid to the US government.

Treasury Secretary Scott Bessent said that revenue collected from tariffs will be “virtually unchanged” in 2026. He added the Trump administration will use other mechanisms to replace the measures, including authorities granted by Congress known as Section 122, 232 and 301 authorities.

“We are not revising our US economic outlook as we expect tariffs to remain through other avenues,” said TD Securities strategists.

The S&P 500 added 0.7% Friday, notching its best week since Jan. 9. An ETF tracking emerging markets hit all-time highs. The yield on 10-year Treasuries rose two basis point to 4.08%. The dollar slid 0.2%.

“By this point, policy shocks should be seen as part and parcel of the investing landscape — but they have often proved so short-lived in recent years that perhaps they don’t even need to be factored into longer-term decision making, but rather taken advantage of tactically,” said Tom Garretson at RBC Wealth Management.

Investors are not going to adjust their outlook until tangible information is provided, according to Michael O’Rourke at JonesTrading.

“The market is uncertain about how to react given the lack of clarity on the exact details of the forthcoming executive order,” said Gennadiy Goldberg at TD Securities.

Neil Dutta at Renaissance Macro Research says the issue is more political than economic, at least right now.

“If Trump turns the trade knob back on, we get more uncertainty. If he decides to give in, then he is basically cooked politically,” he said.

Looking ahead, tariff policy is more likely to be recalibrated than repealed, according to Bret Kenwell at eToro.

“The best-case outcome is a framework that’s clearer and more consistent — and therefore less prone to headline-driven whiplash,” he said.

In addition to the fact that the White House has devised an alternative to the IEEPA levies, Ian Lyngen at BMO Capital Markets noted that not all the tariffs were overturned, so there will continue to be some positive tax revenues from the trade war.

He also noted that the market’s assumption is that by eliminating the deficit-narrowing impact from the IEEPA tariffs, the US will need to borrow more over time – and that would boost the probability that longer-dated coupon auction sizes increase sooner than previously expected.

The counterpoint is that Bessent has been adamant that the bill market will be the primary source for deficit funding until fiscal year 2027 at the earliest, he added.

“We’re certainly open to the notion that coupon auction sizes will eventually increase,” Lyngen added. “That being said, we expect the US rates market to be in a decidedly different position once larger borrowing needs migrate out to the long bond.”

Bond investors were quick to identify the implications of Friday’s developments were largely already priced in, according to Will Compernolle at FHN Financial.

Earlier Friday, data showed the world’s largest economy grew at a weaker-than-anticipated pace combined with figures that underscored stubborn inflation pressures.

Corporate Highlights:

Cybersecurity software shares sank after Anthropic PBC introduced a new security feature into its Claude AI model. Paramount Skydance Corp. said it has “no statutory impediment” in the US for closing its proposed $77.9 billion acquisition of Warner Bros. Discovery Inc. A Securities and Exchange Commission probe involving mobile advertising technology company AppLovin Corp. is “still active and ongoing,” the regulator said. Lucid Group Inc. is slashing its workforce following a difficult 2025 for the electric vehicle maker. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.7% as of 4 p.m. New York time Futures on the Dow Jones Industrial Average rose 0.5% The MSCI World Index rose 0.6% Bloomberg Magnificent 7 Total Return Index rose 1.6% The Russell 2000 Index was little changed Currencies

The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.2% to $1.1791 The British pound rose 0.2% to $1.3496 The Japanese yen was little changed at 154.98 per dollar Cryptocurrencies

Bitcoin rose 1.2% to $67,670.26 Ether rose 1.2% to $1,970.2 Bonds

The yield on 10-year Treasuries advanced two basis points to 4.08% Germany’s 10-year yield was little changed at 2.74% Britain’s 10-year yield declined one basis point to 4.35% Commodities

West Texas Intermediate crude was little changed Spot gold rose 1.9% to $5,092.27 an ounce –With assistance from Chris Nagi, Denitsa Tsekova, Isabelle Lee and Vildana Hajric.

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