Dow Jones Price Prediction: 550-Point Jump After Tariff Fall

US stocks traded higher as of writing, with the Dow Jones Industrial Average trading at 49,510, up roughly 0.2% in early afternoon trading. The S&P 500 gained about 0.6%, while the Nasdaq Composite led gains with a jump of nearly 1%.

Markets turned positive after the Supreme Court ruled that President Donald Trump exceeded his authority in imposing sweeping tariffs under emergency powers.

Markets Reverse After Early Weakness

Wall Street opened lower as investors digested slower economic growth and rising inflation readings. However, sentiment shifted quickly after the court delivered its decision. Traders moved back into equities, lifting major indexes off their session lows.

The Dow added more than 550 points, recovering from earlier losses, after recording a day's range of 49,158.28 to 49,712.56. The S&P 500 strengthened steadily, while technology stocks pushed the Nasdaq higher. The rebound came despite lingering geopolitical tensions and concerns over private credit markets.

Why did markets react positively? Investors appeared to interpret the ruling as a reduction in trade-related uncertainty, even as broader economic signals remained mixed.

Supreme Court Limits Tariff Authority

In a 6-3 ruling, the Supreme Court determined that Trump overstepped his powers by invoking the International Emergency Economic Powers Act of 1977 to impose tariffs on most US trading partners. The court concluded that the statute did not authorize the president to levy broad import taxes during peacetime.

The decision overturns roughly 75% of the tariffs introduced last year under IEEPA. However, tariffs on specific products such as steel, aluminum, and automobiles remain intact because they rely on separate legal authority under Section 232 of the Trade Expansion Act of 1962.

The ruling followed legal challenges from states and businesses, including Learning Resources Inc., which argued that the president lacked statutory authority to impose sweeping trade levies.

Although the court invalidated the existing tariffs, uncertainty persists. The administration signaled that it could reintroduce tariffs using alternative legal frameworks. That possibility leaves trade policy in flux.

What Does Economic Data Say?

Investors also weighed fresh economic data released earlier in the day. US gross domestic product expanded at an annualized rate of 1.4% in the fourth quarter, well below expectations and sharply lower than the previous quarter’s 4.4% pace. The slowdown reflected softer consumer activity and broader economic strain.

At the same time, the Personal Consumption Expenditures price index rose 2.9% year over year in December. Core PCE climbed to 3% from 2.8% in November. Those figures exceeded forecasts and reinforced concerns about persistent inflation.

Meanwhile, the 10-year Treasury yield ticked up to around 4.09%, reflecting cautious sentiment in bond markets. New home sales surpassed expectations, but consumer sentiment declined alongside weaker manufacturing and services activity.

Source: CNBC

What Comes Next For The Dow?

The Dow’s rebound signals resilience, yet traders now face competing forces. On one side, the court’s decision removes a major pillar of trade policy uncertainty. On the other hand, sluggish growth and sticky inflation complicate expectations for interest-rate cuts.

Will equities extend gains if the administration reintroduces tariffs under a new statute? Markets may remain sensitive to further developments. For now, investors watch economic data and policy signals closely as the Dow stabilizes near record territory.