Daily Market Summary – Feb 21st

Supreme Court blocks Trump tariffs; markets surge

The U.S. Supreme Court struck down former President Trump's tariffs, invalidating duties imposed on a wide range of imports and sparking immediate market reactions as major indices like the Dow, S&P 500, and Nasdaq surged to weekly gains. In response, President Trump swiftly signed an executive order imposing a temporary 10 percent tariff on all global imports, aiming to salvage his trade agenda amid economic slowdown and volatility after the court blocked his emergency powers. This move, described as Plan B, involves executive actions to bypass legal hurdles and target imports while protecting domestic industries, even as trade experts labeled a backup tariff strategy illegal due to the absence of a required U.S. balance-of-payments deficit under international rules. CEOs who privately criticized the original tariffs as damaging saw their opposition validated, potentially curbing unchecked executive tariff authority, though uncertainty persists over refunds totaling up to $134 billion for affected importers in a process fraught with delays and eligibility debates.

Global leaders brace for tariff fallout

Global leaders and economies braced for fallout from the tariff rollercoaster, with France asserting the EU's readiness to deploy retaliatory tools against proposed U.S. levies, heightening transatlantic tensions. Germany's Friedrich Merz anticipated lighter burdens following the court ruling against Trump-era tariffs, while the ECB's Fabio Panetta noted that U.S.-imposed duties inflicted greater damage on America through exacerbated inflation and uncertainty than on trading partners. Asian economies assessed the confusion from new tariff threats, Canada faced unpredictable U.S. tools escalating bilateral strains, and world leaders monitored Washington's next steps amid broader trade disruptions. Governments worldwide initiated countermeasures, negotiations, and retaliatory measures, as businesses scrutinized potential economic shifts, with a U.S. wine importer suing to overturn duties on European wines at great personal risk while larger corporations remained silent.

Tariffs damage businesses; prices persist

The tariff ruling darkened business outlooks across sectors, delivering irreversible damage to small businesses through unrefundable losses from heightened costs and operations disruptions, even as giants like Costco positioned for financial gains and reputational boosts from freer trade. Los Angeles' trade-dependent economy, reliant on bustling ports, faced threats and opportunities, while a non-automatic refund process loomed messy with administrative hurdles. Consumer prices for imported goods showed little sign of declining due to entrenched supply chain issues and inflation pressures, directly impacting household budgets. Scott Bessent criticized potential refunds as corporate welfare distorting markets, and the decision rattled bilateral trade like U.S.-UK relations plunged into disarray by a court deeming tariffs on British goods illegal.

Oil prices resilient amid tensions

Oil markets grappled with a reported supply glut that failed to depress prices this year, propped up by robust demand, geopolitical tensions, production cuts, and traders rushing to hedge Iran-related risks after a volatile start. Escalating U.S.-Iran frictions positioned oil as a fair target for price spikes, with potential military conflict nearly doubling U.S. gasoline prices at the pump despite Trump's push for cheap fuel, threatening global supplies. Gold held above $5,000 buoyed by the tariff strike-down and safe-haven demand amid these tensions. A Trump-backed natural gas power plant advanced as a potential top U.S. polluter, while Republicans targeted environmental groups blocking a $9 billion oil project to bolster energy development.

Fed eyes balance sheet shrink; debt rises

Federal Reserve Chair Jerome Powell acknowledged the central bank's balance sheet had expanded excessively, with former Governor Kevin Warsh outlining a cautious plan to shrink it without sparking panic. Sticky inflation pressures appeared set to block interest rate cuts despite U.S. economic softening signals, complicating monetary policy amid tariff-induced turbulence and a Supreme Court ruling injecting uncertainty into rate decisions. A CBO report projected U.S. national debt ballooning to unprecedented levels by 2035, further aggravated by the tariff defeat. Scott Bessent projected at least 3.5 percent U.S. growth in 2026, contrasting broader concerns over last year's growth outpacing job creation and lagging employment recovery.

AI growth surges; tech earnings shine

OpenAI forecasted revenues exceeding $280 billion and compute spending nearing $600 billion by 2030, underscoring explosive AI growth potential. Nvidia's earnings delivered a pivotal AI update to cap the Magnificent Seven results, with smart investors snapping up AI stocks on pullbacks amid volatility and global shifts. Microsoft elevated gaming leadership with pledges against flooding the ecosystem with low-quality AI content, prioritizing quality integration, while a new CEO took the helm amid recommitments to console hardware. Google warned of AI startups chasing hype or lacking business models facing extinction in the cutthroat landscape, as a British firm emerged undervalued and Phoebe Gates launched a $185 million AI venture. Recent AI and crypto shocks disrupted investors fixated on the wrong economic cycle, overlooking wider developments.

Bitcoin grapples with challenges; crypto advances

Bitcoin's trillion-dollar market cap confronted an identity crisis from regulatory crackdowns, ETF outflows, nation-state reserves, scalability woes, and rivalry from altcoins and traditional finance, with sell pressure easing but whales dumping on exchanges. Goldman Sachs CEO David Solomon's Bitcoin ownership fueled debates on following suit. Broader crypto integration advanced via Trump-backed World Liberty Financial's exit mechanism for tokenizing a Maldives hotel, enabling blockchain real estate liquidity.

Home prices soar; rates dip slightly

Soaring home prices rendered housing unaffordable for many, souring consumer sentiment and economic mood, with low inventory and steady demand pushing values higher and no crash imminent for waiting buyers. Mortgage and refinance rates edged up slightly but stayed below 6 percent, while HELOC introductory rates dipped to 1.99-3.99 percent. High-yield savings hit 4 percent APY, top CDs and money markets reached 4-4.01 percent, and top cash yields offered up to 5.3 percent across accounts prioritizing liquidity.

Stocks rally; retail, logistics surge

U.S. stocks broadly advanced post-tariff ruling, with Alphabet climbing on digital ad lifts and tariff relief minimal against persistent global headwinds. Retail and apparel shares like Floor & Decor, Victoria's Secret, Oxford Industries, Crocs, and others skyrocketed on earnings and momentum, alongside e-commerce platforms such as Etsy, eBay, and Wayfair. Logistics and infrastructure names including Expeditors, Old Dominion, MasTec, and Enphase soared, while renewables and pet products like Shoals and Bark gained traction. Cybersecurity plunged with Rapid7, Zscaler, and peers signaling sector woes, and CrowdStrike cratered after a faulty update caused global outages erasing billions. Commodity futures mixed, with wheat, cotton, and hogs rallying on supply concerns and demand, corn steady, soybeans slipping post-ruling, and cattle falling.

UPS buyouts approved; layoff news

UPS secured court approval for $150,000 voluntary driver buyouts, enabling up to 13,000 job cuts under a new union deal. Retail investors often mistook frequent trading for long-term strategies, amplifying volatility over growth. Retirement trends revealed low median savings for ages 65-74 with stark income and education gaps, prompting boomer queries on planning. United Airlines boosted co-branded card perks to intensify rewards competition. PacifiCorp settled wildfire claims for $575 million, as Frito-Lay announced 247 layoffs from a warehouse closure. Warren Buffett targeted a single stock, sparking follow-on debates, while baby boomers and 30-year-olds sought tailored financial blueprints leveraging compounding and diversification.