Zacks Equity Research
4 min read
Wall Street closed higher on Wednesday as Supreme Court judges looked unconvinced about sweeping tariffs imposed by the Trump administration. Market participants hoped that some of these tariffs might be recalled if the apex court delivers an adverse verdict. Moreover, the fear of an AI bubble burst seemed to be dwindling. A couple of strong economic data also boosted investors confidence in the U.S. economy. All three major stock indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) rose 0.5% or 225.76 points to close at 47,311.00. Notably, 16 components of the 30-stock index ended in positive territory, while 14 finished in negative territory. The tech-heavy Nasdaq Composite finished at 23,499.78, advancing 0.7% or 151.16 points driven by the strong performance of AI infrastructure giants.
The S&P 500 gained 0.4% to finish at 6,796.29. Out of the 11 broad sectors of the broad-market index, nine ended in positive territory, while two were in negative territory. The Consumer Discretionary Select Sector SPDR (XLY) and the Materials Select Sector SPDR (XLB) rose 1.25 and 0.6%, respectively.
The fear gauge, the CBOE Volatility Index (VIX) was down 5.2% to 18.01. A total of 19.17 billion shares were traded on Wednesday, lower than the last 20-session average of 20.96 billion. Advancers outnumbered decliners on the NYSE by a 2.09-to-1 ratio. On the Nasdaq, a 1.84-to-1 ratio favored advancing issues.
On Nov 5, the Supreme Court started hearing arguments on the legal validity of the imposition of sweeping tariffs by the Trump administration. The arguments were based on the International Emergency Economic Powers Act (IEEPA) of 1977. This law empowered the President to declare an economic emergency and take action. However, the law never specifically mentioned tariffs as a protective mechanism against economic challenges.
U.S. Solicitor General D. John Sauer argued that “duties are not revenue-raising tariffs and are only incidental.” However, the apex court’s three liberal-leaning justices and three conservative judges raised skeptical questions regarding President Donald Trump’s authority to impose such tariffs.
These group of justices led by Chief Justice John Roberts observed that “the vehicle is an imposition of taxes on Americans, and that has always been the core power of Congress.” The Supreme Court currently has a 6-3 conservative majority. Legal experts are expecting the final verdict to come after several weeks, maybe by this year-end.
