Dow Jones Surges After Supreme Court Strikes Down Trump Tariffs

WASHINGTON (Azat TV) – U.S. stocks, including the Dow Jones Industrial Average, rallied sharply on Friday, February 20, 2026, reversing earlier losses after the Supreme Court delivered a landmark 6-3 ruling striking down President Donald Trump’s sweeping global tariffs. This pivotal decision immediately provided relief to thousands of import-dependent companies, helping major market averages recover from pressure following disappointing fourth-quarter GDP growth and higher-than-expected inflation data released earlier in the session.

The Dow Jones Industrial Average climbed 130.43 points, or 0.26%, to close at 49,525.59, recovering from an intraday deficit of over 200 points. The broader market also saw significant gains, with the S&P 500 rising 0.66% to 6,907.34 and the tech-heavy Nasdaq Composite surging 1.11% to 22,935.19. The market’s dramatic turnaround underscored the significant impact of judicial decisions on investor sentiment and trading strategies.

Supreme Court’s Tariff Reversal Fuels Market Gains

The Supreme Court’s 6-3 decision found that President Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) of 1977 by imposing broad global tariffs. Chief Justice John Roberts authored the majority opinion, joined by conservative Justices Neil Gorsuch and Amy Coney Barrett, along with the court’s three liberal justices. The ruling specifically applies to tariffs imposed under IEEPA since February 2025, including levies on China, Canada, and Mexico related to fentanyl trafficking, and the broader “Liberation Day” reciprocal tariffs affecting over 100 countries. However, tariffs imposed under other legislation, such as Section 232 of the Trade Expansion Act of 1962, covering steel and aluminum, remain unaffected.

The ruling was a long-awaited development that had been a ‘large cloud over Markets for the past 15 months,’ as noted by MarketPulse. The immediate aftermath saw advancers significantly outpacing decliners, particularly in tariff-sensitive sectors. The VIX volatility index, a key measure of market uncertainty, dropped 5% following the decision, indicating a subsidence of investor apprehension.

Dow Jones Recovers Amid Economic Headwinds

Despite early market pressure from concerning economic reports, the Dow Jones Industrial Average demonstrated resilience, ending the trading day in positive territory. Gains were notably concentrated in retail and industrial sectors, which are direct beneficiaries of reduced import costs. Companies such as Home Depot and Caterpillar, which had been trading lower, turned positive after the ruling. Walmart, which had reported strong quarterly earnings the previous day, also saw its shares rebound, adding 0.4% after initial weakness.

The recovery in the Dow Jones was particularly significant given the backdrop of disappointing economic data. The Commerce Department reported that fourth-quarter GDP grew at an annualized rate of just 1.4%, significantly below the 2.5% forecast by economists. This slowdown was partly attributed to a 43-day government shutdown during the quarter. Furthermore, the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, showed core prices increasing by 0.4% in December, bringing the annual rate to 3.0%—still above the Fed’s 2% target.

Broader Market Reaction and Key Sector Performance

The positive momentum extended across other major U.S. indices. The S&P 500 saw nine of its 11 sectors finish higher, with consumer discretionary leading the advance, up 1.8%, followed by technology and communication services. The Nasdaq Composite, heavily weighted with technology and e-commerce giants, surged notably, ending a five-week losing streak. Megacap technology stocks like Amazon, Alphabet, and Meta rallied, with investors pricing in reduced cost pressures from the tariff reversal. Amazon surged over 2%, Alphabet gained nearly 4%, and Meta advanced 2%.

Conversely, some sectors and individual stocks experienced losses. Defensive sectors such as utilities and consumer staples lagged, while within the Dow Jones, Intel, Nike, American Express, IBM, and Goldman Sachs were among the top losers. The mixed performance highlighted how specific company exposures to tariffs and broader economic conditions influenced their immediate market reaction.

Economic Context and Future Outlook

The Supreme Court’s ruling arrived amidst a complex economic landscape. Beyond the disappointing GDP and persistent inflation, Friday’s data slate included a mixed bag of reports, such as softening preliminary S&P Global PMIs for February and a slightly lower University of Michigan consumer sentiment index. Outgoing Atlanta Fed President Raphael Bostic maintained a hawkish stance, projecting no rate cuts for 2026 and emphasizing that inflation remains too high, a view that takes on fresh significance with the removal of tariff-related inflationary pressures.

President Trump reacted strongly to the Supreme Court’s decision, calling it a ‘disgrace’ and indicating that his administration already has a ‘backup plan’ to respond. This suggests that while one form of tariff imposition has been struck down, the administration may seek alternative legal mechanisms to replicate similar trade policies, albeit potentially with more limited scope and slower implementation, according to analysts cited by FXStreet. The potential for continued trade policy shifts and geopolitical tensions, particularly concerning Iran, could introduce ongoing volatility into the markets.

The confluence of a landmark judicial decision, mixed economic indicators, and the potential for new policy responses creates a dynamic environment for investors. The Dow Jones Industrial Average’s swift recovery underscores how sudden regulatory changes can override prevailing economic concerns, necessitating vigilant monitoring of both legal and macroeconomic developments for informed trading and investment decisions.