Court ruling on tariffs, U.S. futures, Nvidia - what’s moving markets
Investing.com - U.S. stock futures surged higher Thursday after a U.S. court declared U.S. President Donald Trump’s broad-based tariffs regime invalid, helped by solid results from chip giant Nvidia. Tesla CEO Elon Muck has also announced his departure from the Trump administration, leaving his role as head of DOGE.
1. U.S. court blocks most Trump tariffs
The cornerstone of U.S. President Donald Trump’s economic vision - a phased rollout of universal tariffs on all U.S. imports - has been declared "invalid as contrary to law" by the United States Court of International Trade.
The U.S. trade court ruled late Wednesday the president overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the United States than they buy.
The Trump administration said it would appeal the ruling to the U.S. Court of Appeals for the Federal Circuit in Washington, and will in all likelihood go all the way to the Supreme Court if needed.
The court was not asked to address some industry-specific tariffs Trump has issued on automobiles, steel and aluminum, using a different statute.
That said, the ruling, if it stands, blows a giant hole through Trump’s strategy to use steep tariffs to wring concessions from trading partners.
Without the instant leverage provided by tariffs of 10% to 54% or higher, the Trump administration would have to find new forms of leverage or take a slower approach to negotiations with trading partners.
2. Nvidia impresses as China hit not as bad as feared
Nvidia (NASDAQ:NVDA) reported better-than-expected first-quarter results, as the world’s most valuable semiconductor firm benefited from customers stockpiling its AI chips before fresh U.S. curbs on China exports took effect.
For the three months ended April 27, the company announced first-quarter adjusted earnings per share of $0.96 on revenue of $44.06 billion - above the expected per-share income of $0.93 and revenue of $43.31 billion.
"Global demand for Nvidia’s AI infrastructure is incredibly strong," CEO Jensen Huang said. "AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate.”
This beat comes despite a drag on growth from the U.S. ban on Nvidia H20 chips to China. The company took a $4.5 billion hit from the ban, which was less than the previously estimated $5.5 billion charge as it repurposed parts of the H20 chips.
Looking ahead, the company forecast fiscal 2026 second-quarter revenue of $45 billion, plus or minus 2%, missing projections of $45.66B, reflecting a $8 billion hit from the U.S. ban on chip sales to China expected to be recorded in the current quarter.
Nvidia stock still rose over 5% in premarket trading as investors digested the news of the strong first quarter and that the hit in the current fiscal second quarter was not as bad as feared.
3. U.S. futures surge on tariffs ruling
U.S. stock futures soared higher Thursday, boosted by a federal court blocking most of President Trump’s “reciprocal” tariffs as well as healthy earnings from artificial intelligence heavyweight Nvidia.
At 03:30 ET (07:30 GMT), the S&P 500 futures traded 92 points, or 1.6%, higher Nasdaq 100 futures climbed 415 points, or 2%, and Dow futures surged 535 points, or 1.3%.
Wall Street received a boost late Wednesday after the U.S. Court of International Trade ruled that President Donald Trump overstepped his authority by imposing duties on imports from countries with large trade surpluses with the United States.
Additionally, strong earnings from chipmaker Nvidia have rejuvenated investor optimism across the board, suggesting AI can help drive gains across the board.
There are more earnings to digest Thursday, including from Kohl’s Corp (NYSE:KSS), Foot Locker (NYSE:FL) and Hormel Foods (NYSE:HRL) before the open, along with Marvell Technology (NASDAQ:MRVL) and Dell (NYSE:DELL) after the close.
The data slate includes the second reading on U.S. GDP and weekly jobless claims, while Fed speakers include Bank of Richmond President Thomas Barkin, Fed Bank of Chicago head Austan Goolsbee and Bank of Dallas head Lorie Logan.
4. Musk leaves Trump administration
Tesla (NASDAQ:TSLA) CEO Elon Musk has announced his departure from the Trump administration, bringing an end to his time as head of the Department of Government Efficiency, tasked with slashing wasteful government spending.
This move comes just a day after he criticized a sweeping tax cut bill that is backed by the White House, calling it too expensive and a measure that would undermine his work to generate a more efficient government.
In his role as head of the U.S. DOGE Service, Musk upended several federal agencies but there remain doubts about how successful he was in delivering the generational savings he had sought.
On the campaign trail, Musk had said DOGE would be able to cut at least $2 trillion in federal spending. DOGE currently estimates its efforts have saved $175 billion so far, a number under dispute.
5. Crude soars on improved sentiment
Oil prices soared higher Thursday, with sentiment boosted after a U.S. court ruled that President Donald Trump could not proceed with his plans for reciprocal trade tariffs.
At 03:30 ET, Brent futures climbed 1.5% to $65.29 a barrel, and U.S. West Texas Intermediate crude futures rose 1.7% to $62.88 a barrel.
The court ruling boosted risk appetite, as Trump’s tariff plans have been the biggest point of uncertainty for oil markets this year, as traders fretted over their economic impact and their effect on oil demand.
That said, Wednesday’s court ruling added another layer of uncertainty, given that the White House is set to appeal the decision.
Adding to the positivity was data from the American Petroleum Institute showing that U.S. oil inventories shrank by 4.24 million barrels in the past week, in contrast to expectations for a build of 1 million barrels.
Signs of a sharp drawdown in U.S. oil stockpiles sparked hopes that fuel demand in the country remained strong despite heightened economic uncertainty, and traders will look for confirmation from official data later in the session.
(Reuters contributed reporting.)
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