Stocks Rise as Tariff Battle Shifts to the Courts
Market Recap for the Week of June 1, 2025
The U.S. stock market began last week on Tuesday with a very strong day, gaining nearly 2%. Those gains were mostly sustained, with the S&P 500 ending the four-day trading week up 1.88%.
Significant tariff news was released during the week. On Wednesday, the U.S. Court of International Trade ruled that the President does not have the authority to enact such sweeping and broad tariffs. Instead, the court stated that this authority lies with Congress. Then, on Thursday, a federal appeals court reinstated the tariffs. While the back-and-forth can be difficult to follow, the bottom line is that this issue has now become a legal battle—which should come as no surprise. Uncertainty surrounding trade policy remains a major theme for 2025.
In other news, the PCE inflation index rose just 0.1% last month, bringing the year-over-year rate to 2.1%. This is the Federal Reserve's preferred measure of inflation. With inflation so close to the 2% target, the Fed appears to have room to cut rates this year. However, fears of future inflation driven by tariffs could cause the Fed to remain cautious for a bit longer.
“Tariffs have entered the courtroom, adding a new layer of uncertainty to trade policy in 2025.”
Chart of The Week
Our chart of the week shows the performance of the S&P 500 since the market bottomed on April 8. Notice the large jump at the beginning of the chart—that was the nearly 10% rally on the day the White House announced a 90-day pause on tariffs. However, even after that day, the market drifted lower, nearly returning to the low point for the year. Then, about a month later, the market had almost fully recovered its losses and climbed roughly 18%. During this period, there was no major improvement in the tariff situation, and economic data continued to weaken. The point is, the market doesn’t wait for the economy to bottom—this is what makes market timing so difficult. If you're a stock investor, this is the kind of volatility you must be prepared to endure.
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Source: YCharts
