US stock market thrills to tariff ruling, Nvidia earnings and GDP revision

The news just keeps piling up this week in favor of continuing the stock market rally. While analysts were calling for the end of the recovery rally late last week, the data continues to stack up in bulls' favor, and the NASDAQ Composite saw its growth-weighted index rise 1.25% at the open on Thursday.

Late Wednesday, a three-panel group of judges at the US Court of International Trade revoked the Trump administration's right to impose tariffs under the International Emergency Economic Powers Act. The ruling means that the 10% blanket tariff that the President imposed on all other trading partners, as well as his national tariffs against Canada, Mexico and China, will no longer be in effect. However, the industry-specific tariffs on aluminum, steel and autos will remain in place since they stem from a separate legal grounding.

Goldman Sachs expects the Trump administration to appeal the ruling and also reinstitute tariffs using separate laws in the meantime, but the ruling from the Court of International Trade definitely points toward limiting the President's trade management powers.

"The administration could quickly replace the 10% across-the-board tariff with a similar tariff of up to 15% under Sec. 122. Those tariffs would last for only up to 150 days, after which the law requires Congressional action to extend," writes Goldman Chief Political Economist Alec Phillips. Otherwise, the President could also launch Section 301 investigations on trading partners in order to reinstate permanent tariffs.

Also during Wednesday's post-market, Nvidia (NVDA) offered up another double-beat quarter. Shares rose from $135 at Wednesday's close to open above $143 on Thursday. The company earned $0.81 in adjusted EPS, exceeding the $0.75 expected by Wall Street. The share price was not dissuaded by worse guidance for Q2 revenue than expected. Nvidia expects QoQ revenue growth, that has regularly surpassed 10% over the past two years, to rise just 2% in the current quarter that ends in July.

Lastly, the US Commerce Department released its second Q1 GDP estimate, -0.2% QoQ, which was an improvement compared with the preliminary -0.3%.

Salesforce (CRM) earnings were less exciting as analysts noted that much of its growth in revenue stemmed from foreign exchange gains due to the US Dollar losing value during the first quarter. CRM stock fell 6% at Thursday's open.

Overall, the US stock market has largely returned to levels it last saw at the very start of the year. Bulls will likely seize on the narrative that, with less to fear from tariffs, the upside offers a good bet. This is particularly likely with Trump's tax-cut heavy budget bill making its way through the Senate.

NASDAQ Composite YTD daily chart (candlestick) with S&P500 (red) and Dow Jones (purple)