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U.S. Markets End Holiday-Shortened Trading Week Higher on Tariff News
It was a positive week for equity markets, with modest gains through Thursday before a stronger rally on Friday following news that the U.S. Supreme Court ruled to overturn the Trump administration’s sweeping global tariffs. Global equities, as measured by the MSCI ACWI, rose 1.01% for the week, while domestic large-cap stocks, measured by the S&P 500, gained 1.11%. The Nasdaq led performance, snapping a five-week losing streak and finishing up over 1.50% for the week.
Tariff News
The Supreme Court voted 6–3 to strike down the administration’s global tariffs, ruling that the President exceeded his authority under the International Emergency Economic Powers Act, while leaving questions around potential importer refunds to lower courts. In response, the administration announced an immediate 15% tariff under Section 122 of the Trade Act of 1974, which can remain in place for up to 150 days as broader investigations under Sections 301 or 232 are pursued. According to the Penn-Wharton Budget Model, approximately $175 billion had been collected under the prior tariff framework, representing about 0.6% of the U.S. economy.
Core PCE Inflation Accelerates
The Bureau of Economic Analysis reported that core personal consumption expenditures inflation, the Federal Reserve’s preferred measure, rose 0.4% month over month and 3.0% year over year in December, accelerating from November’s readings. Headline PCE increased 2.9% year over year, slightly above the prior month and marking the highest level since March 2024.
GDP Growth Loses Momentum
Separate data from the Bureau of Economic Analysis showed that U.S. economic growth slowed sharply in the fourth quarter, with real GDP expanding at a 1.4% annualized pace compared with 4.4% in the third quarter, as declines in government spending and exports and a moderation in consumer spending weighed on overall growth.
Looking Ahead
For the week ahead, key economic data will include housing indicators, GDP, inflation readings, and Purchasing Managers’ Index reports for both the manufacturing and services sectors.
As Always
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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