U.S. stocks climbed Wednesday as the Dow Jones Industrial Average rose 225.76 points to 47,311.00, after Supreme Court justices pressed skeptical questions about President Donald Trump’s authority to impose sweeping tariffs. Investors pared back wagers that the tariffs will be upheld, while semiconductor firm Advanced Micro Devices beat third-quarter expectations and helped lift AI-related names. Mixed but mostly constructive economic prints — including ADP’s 42,000 private payroll gain and an ISM services reading of 52.4% — added to the day’s market tone.
Key takeaways
- The Dow gained 225.76 points, or 0.48%, to close at 47,311.00; the S&P 500 rose 0.37% to 6,796.29, and the Nasdaq climbed 0.65% to 23,499.80.
- Supreme Court questioning focused on whether the International Emergency Economic Powers Act (IEEPA) authorizes the tariffs; prediction-market odds the court will uphold the levies dropped to roughly 30%.
- AMD beat Q3 estimates — adjusted EPS $1.20 on $9.25 billion in revenue — and its shares closed up about 2.5%, helping to stabilize the AI trade.
- Macro data were constructive: ADP reported private payrolls rose by 42,000 in October; the ISM services index jumped to 52.4%, signaling expansion.
- Treasury yields moved higher on firmer data, complicating the outlook for stretched equity valuations and expectations for a December Fed rate cut.
- Small caps outperformed, with the Russell 2000 up roughly 1.6%, reflecting the market’s rotation in advance of a potential policy shift on tariffs.
- Cyclical names sensitive to trade risk — Ford, General Motors and Caterpillar — rose more than 2%, as markets pared the probability that tariffs remain intact.
- Not all AI-related names recovered: Palantir extended losses after a sharp drop, Super Micro and Arista saw material pullbacks following earnings misses.
Background
President Trump’s broad tariff campaign has been challenged in lower courts on the grounds that the administration exceeded statutory authority. The dispute centers on the interpretation of the International Emergency Economic Powers Act, a Cold War–era statute that grants the executive branch sweeping powers over international commerce during declared national emergencies but does not explicitly mention tariffs. Lower courts struck down parts of the tariff program, and the administration appealed to the Supreme Court, creating legal uncertainty that now filters into market pricing.
The tariffs have had visible effects across sectors: manufacturers with complex global supply chains have reported margin pressure, consumer-facing companies have flagged higher input costs, and some advertisers and retailers have cited tariff-driven weakness. Meanwhile, the rise of AI has concentrated investor attention on a subset of semiconductors and software companies; valuations for some of those names became stretched earlier in the year, setting the stage for volatile moves around quarterly results and guidance.
Main event
On Wednesday the Supreme Court heard oral arguments about whether the IEEPA authorized the specific tariff declarations used by the administration. Justices from across the ideological spectrum pressed Solicitor General D. John Sauer on statutory text and limits, signaling skepticism about an unbounded executive trade power. Traders on Kalshi and Polymarket slashed the odds that the court will uphold the tariffs, with contract probabilities falling to about 30% from roughly 40–50% earlier in the week.
Markets reacted quickly: tariff-sensitive industrials and automakers rallied — Ford and General Motors jumped more than 2% — while Caterpillar gained around 4%. Investors appeared to price in a lower near-term chance of sustained tariff-related costs to imports, a shift that would reduce one source of corporate margin pressure if confirmed by a court ruling or follow-up policy action.
At the same time AMD’s third-quarter report landed slightly ahead of expectations: adjusted earnings of $1.20 per share on $9.25 billion in revenue beat consensus and eased some concerns about margins. AMD’s stock, which opened lower on margin guidance worries, turned positive and closed up about 2.5%, helping to lift Broadcom, Micron and Oracle among other AI-linked names.
Analysis & implications
The Supreme Court’s questioning does not produce an immediate legal outcome, but the tone of oral argument matters for market expectations. If the justices narrow executive authority under IEEPA, it could unwind a major tool in trade policy and force the administration to seek congressional authority or alternative statutory bases. That would have wide-ranging implications for exporters, importers and supply-chain planning — and could lead to rebates or retrospective adjustments if tariffs are invalidated.
For equity markets, the potential rollback or limitation of tariffs reduces a visible downside risk for margin-sensitive sectors and for companies exposed to foreign imports. Cyclical sectors that underperformed on tariff worries stand to benefit if markets increasingly price a lower probability of sustained duties. Conversely, firms that had priced in higher revenue from domestic production related to protectionist policy might lose an assumed tailwind.
Even so, the market’s reaction is filtered through stretched valuations and mixed earnings momentum. ADP’s payroll gain of 42,000 and ISM services at 52.4% underpin a resilient economy, which can keep yields elevated and cap multiple expansion. That dynamic suggests a market environment where sector rotation and stock-specific fundamentals matter more than a broad market surge: gains are likely uneven and contingent on earnings clarity and policy outcomes.
Comparison & data
| Index / Item | Wednesday Close | Change |
|---|---|---|
| Dow Jones Industrial Average | 47,311.00 | +225.76 (+0.48%) |
| S&P 500 | 6,796.29 | +0.37% |
| Nasdaq Composite | 23,499.80 | +0.65% |
| Russell 2000 | — | +1.6% (outperformed) |
| ADP private payrolls (Oct.) | +42,000 | Est. +22,000 |
| ISM services index (Oct.) | 52.4% | Sep: 50% |
The table highlights Wednesday’s market moves and key macro data. While broad indexes were higher, leadership was narrow: a handful of mega-cap and AI-related names drove Nasdaq gains, while small caps posted stronger relative performance as tariff uncertainty shifted. Traders will watch whether yields keep climbing on continued data strength, which could blunt further multiple expansion.
Reactions & quotes
“I don’t know we’re going to know the tariff effect… until the first quarter of next year,”
Phil Blancato, chief market strategist, Osaic
Blancato emphasized that the economic and price impacts of tariffs will take time to surface in corporate results, contributing to investor caution despite the Supreme Court’s skeptical questions.
“Last night… I don’t think it was good for Republicans,”
President Donald Trump
Trump’s remark after election-night setbacks underlines how political developments are converging with market-sensitive policy issues such as tariffs and local election outcomes tied to real-estate and regulatory agendas.
“Tariff-related weakness showed up for the first time in our digital ads universe,”
RBC analyst note on Pinterest
Analysts flagged that tariffs were beginning to dent advertising demand at major retailers, a mechanism that weighed on Pinterest and other consumer-adjacent platforms.
Unconfirmed
- Whether the Supreme Court will issue a ruling quickly — justices gave no clear signal on timing and rulings could take months.
- Whether the court will invalidate all tariffs, some selectively, or simply limit how the executive can deploy IEEPA; market scenarios remain speculative.
- Whether importers will receive rebates or retroactive relief if tariffs are struck down — legal and administrative pathways for remedies are unresolved.
Bottom line
Wednesday’s market action illustrates how legal and macro threads can collide: skeptical Supreme Court questioning reduced the perceived risk from tariffs, prompting a relief bounce in tariff-sensitive and cyclical names, while AMD’s earnings calmed some valuation concerns in the AI cohort. Still, the market’s advance was selective rather than broad-based, with small-cap outperformance and specific winners offset by lingering weakness in richly valued AI plays.
Investors should watch three dynamics going forward: the Supreme Court’s eventual decision and any follow-up policy response; incoming corporate earnings and margin commentary that will test whether the tariffs materially affected results; and macro prints that influence yields and Fed expectations. Together those factors will determine whether the current patchwork rally broadens into a sustained advance or remains a series of sector rotations and stock-specific moves.