A global rally for stocks loses steam amid questions about what will happen to Trump's tariffs

Key Points

• Federal appeals court blocks Trump’s sweeping tariffs under the 1977 International Emergency Economic Powers Act, ruling the law doesn’t authorize such import duties.
• Global markets surged, with S&P 500 futures up 1.6%, Dow futures up 1.2%, Japan’s Nikkei +1.5% and South Korea’s Kospi +1.4%.
• The Trump administration has appealed, and many double-digit tariff hikes remain on a 90-day pause, leaving businesses and consumers uncertain about future trade policy.
• U.S. stocks remain near record highs despite a 0.6% pullback in the S&P 500, while corporate reports were mixed—Nvidia jumped 4.9% after hours and Abercrombie & Fitch soared 14.7%.

NEW YORK (AP) — A big rally for stocks that began in Asia on Thursday lost steam after sweeping into Europe and the United States amid uncertainty about what will happen next after a U.S. court blocked many of President Donald Trump’s sweeping tariffs.

The S&P 500 rose 0.4% after giving up more than half of an early gain. The Dow Jones Industrial Average added 117 points, or 0.3%, and the Nasdaq composite rose 0.4%.

It’s a downshift after stocks initially leaped nearly 2% in Tokyo and Seoul, where markets had the first chance to react to the ruling late Wednesday by the U.S. Court of International Trade. The court said that the 1977 International Emergency Economic Powers Act that Trump cited for ordering massive increases in taxes on imports from around the world does not authorize the use of tariffs.

The ruling at first raised hopes in financial markets that a hamstrung Trump would not be able to drive the economy into a recession with his tariffs, which had threatened to grind down on global trade and raise prices for consumers already sick of high inflation. Trump has said he wants to bring manufacturing jobs back to the United States, and he warned the process could cause some pain for U.S. households.

But the tariffs remain in place for now while the White House appeals the ruling, and the ultimate outcome is still uncertain. The court’s ruling also affects only some of Trump’s tariffs, not those on foreign steel, aluminum and autos, which were invoked under a different law.

Trump “is still able to impose significant and wide-ranging tariffs over the longer-term through other means,” according to Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management.

Such uncertainty helped dampen the excitement in financial markets as trading headed through Europe into the United States, where the moves were much more modest than in Asia. The U.S. court’s move was nevertheless seen as a positive for financial markets.

“The bar is raised for President Trump to resurrect his tariffs,” said Brian Jacobsen, chief economist at Annex Wealth Management.

“Markets are pricing that this is a better type of uncertainty than what we’ve had since Liberation Day,” which is what Trump called his April 2 announcement of a worldwide set of sweeping tariffs.

The S&P 500 has pulled within 3.8% of its all-time high after dropping roughly 20% below at one point last month.

On Wall Street, tech stocks led the way after Nvidia once again topped analysts’ expectations for profit and revenue in the latest quarter.

The chip company has grown into one of the U.S. market’s largest and most influential stocks because of the frenzy around artificial-intelligence technology, and its 3.2% rise was the strongest force by far lifting the S&P 500.

C3.ai, an AI application software company, jumped 20.8% after it reported stronger profit than analysts expected for its latest quarter. It also said the U.S. Air Force increased the maximum possible value for its contract by $350 million to $450 million. The company’s revenue last quarter totaled $108.7 million.

E.l.f. Beauty was another big winner and rose 23.6% after the cosmetics company delivered a stronger profit for the latest quarter than analysts expected. It also said it agreed to buy Hailey Bieber’s Rhode skincare brand in a $1 billion deal. Rhode had $212 million in net sales in the 12 months through March.

Bieber, a model and the wife of singer Justin Bieber, will be Rhode’s chief creative officer and head of innovation and also a strategic advisor to the combined companies.

They helped offset a drop for Best Buy, which fell 7.3% even though it reported a stronger profit than expected. Its revenue fell short of analysts’ forecasts.

The electronics retailer also cut its forecasted ranges for revenue and profit over the full year on the assumption that “tariffs stay at the current levels for the rest of the year, and there is no material change in consumer behavior from the trends we have seen in recent quarters,” Chief Financial Officer Matt Bilunas said.

Many companies have recently said that the uncertainty caused by tariffs is making it too difficult to offer any financial forecasts for the upcoming year.

All told, the S&P 500 rose 23.62 points to 5,912.17. The Dow Jones Industrial Average added 117.03 to 42,215.73, and the Nasdaq composite gained 74.93 to 19,175.87.

In the bond market, Treasury yields eased following some mixed reports on the economy. One said that the U.S. economy likely shrunk by less in the first three months of the year than earlier estimated. Another said slightly more U.S. workers applied for unemployment benefits last week than economists expected.

The yield on the 10-year Treasury fell to 4.43% from 4.47% late Wednesday.

In stock markets abroad, Japan’s Nikkei 225 jumped 1.9% to help lead Asian markets higher, while stocks rose 1.4% in Hong Kong and 0.7% in Shanghai. South Korea’s Kospi rallied 1.9% after the Bank of Korea cut its key interest rate to ease pressure on the economy.

The moves for European stocks were much more muted. France’s CAC 40 and Germany’s DAX both swung from early gains to modest losses.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.