[New York Stock Exchange] Gains Fueled by Nvidia, Trimmed by Revival of U.S. Tariffs... Closes Slightly Higher

U.S. Court Rules Trump Tariffs Illegal Under IEEPA,
But Appeals Court Maintains Tariff Effect After Just One Day
Market Gives Up Nvidia-Driven Gains Amid Tariff Confusion
Q1 GDP Growth at -0.2%... Initial Jobless Claims Rise

The three major indices on the New York Stock Exchange closed slightly higher on May 29 (local time). Although investor sentiment was buoyed by Nvidia's surprise earnings the previous day, gains were limited as confusion surrounding tariff policies intensified. The U.S. Federal Circuit Court of Appeals decided to suspend the effect of the lower court's ruling from the previous day, which had partially invalidated President Donald Trump's tariff measures, after just one day. As a result, the Trump administration's aggressive tariff policies are expected to continue.

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On this day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average (Dow) closed at 42,215.73, up 117.03 points (0.28%) from the previous session. The large-cap S&P 500 index rose 23.62 points (0.4%) to 5,912.17, while the tech-heavy Nasdaq index gained 74.93 points (0.39%) to finish at 19,175.87.

The key factors investors focused on were Nvidia's earnings and the court's tariff ruling. The previous day, the U.S. Court of International Trade determined that a series of tariff measures imposed by President Trump under the International Emergency Economic Powers Act (IEEPA) exceeded his legal authority and were therefore illegal. This decision raised the likelihood that both the so-called "Liberation Day Tariff" of April 2?a 10% base tariff on all global imports?and the country-specific reciprocal tariffs scheduled to take effect after a 90-day grace period would be invalidated. However, since the Federal Circuit Court of Appeals granted the Trump administration's request for an injunction on this day, the effect of certain tariffs, which the lower court had invalidated, will remain in place while the appeal is ongoing.

Immediately after the market opened, stocks rallied on the belief that President Trump's tariff policies had lost momentum. However, gains were pared back from the morning after White House aides indicated an intention to continue imposing tariffs based on legal grounds other than the IEEPA. Furthermore, the Federal Circuit Court of Appeals' decision to suspend the lower court's ruling reinforced expectations that President Trump's aggressive tariff policies would persist. Concerns over economic slowdown and rising inflation due to tariffs also intensified.

Meanwhile, Jerome Powell, Chair of the U.S. Federal Reserve (Fed), met with President Trump at the White House for the first time since Trump's second term began. Powell emphasized that future monetary policy decisions would be based on economic indicators, independent of political considerations. This statement was interpreted as a reaffirmation of the independence of monetary policy in the face of President Trump's ongoing pressure for interest rate cuts. The Fed has consistently maintained a cautious approach to monetary easing due to concerns about stagflation?rising prices amid economic stagnation?caused by tariffs.

Larry Tentarelli, founder of Blue Chip Daily Trend Report, said, "Generally, the market does not like uncertainty, which makes predictions difficult," adding, "The tariff news cycle is expected to persist in the long term, and this will increase short-term volatility."

Despite the confusion over tariff policy, Nvidia's strong earnings released the previous day helped support the stock market. Nvidia announced that for the first quarter of fiscal 2026 (February to April of this year), revenue reached $44.06 billion and net income was $18.8 billion, up 69% and 26% year-on-year, respectively. Adjusted earnings per share (EPS) were $0.96. These figures exceeded the consensus estimates compiled by LSEG (revenue of $43.31 billion and EPS of $0.93). Revenue from the key data center segment, which includes artificial intelligence (AI) chips and related components, grew 73% year-on-year to $39.1 billion, driving overall revenue growth. This demonstrates that demand for AI semiconductors continues to expand, fueled by the proliferation of applications such as OpenAI's ChatGPT, a generative AI.

James Demmert, founder and Chief Investment Officer (CIO) of Main Street Research, analyzed, "Nvidia's strong earnings report can energize overall investor optimism and help focus attention on the power of AI, rather than on the tariff and tax headlines coming out of Washington."

On the morning of this day, the U.S. Department of Commerce announced that the preliminary estimate for U.S. first-quarter gross domestic product (GDP) growth rate was down 0.2% annualized from the previous quarter. Although this was a slight upward revision from the earlier advance estimate (-0.3%), the decline in consumer spending and the impact of increased corporate imports due to tariff policy led to negative growth for the first time in three years since the first quarter of 2022 (-1.0%). Initial jobless claims also increased. According to the U.S. Department of Labor, the number of initial jobless claims for the week of May 18?24 rose by 14,000 from the previous week (226,000) to 240,000, exceeding the forecast (229,000).

U.S. Treasury yields are declining. The yield on the U.S. 10-year Treasury note, the global benchmark for bond yields, fell by 4 basis points (1bp=0.01 percentage points) from the previous session to 4.43%. The yield on the 2-year Treasury note, which is sensitive to monetary policy, also dropped by 4 basis points to 3.94%.

By stock, Nvidia surged 3.25% on the back of its surprise earnings. Cadence Design Systems and Synopsys, which had plunged the previous day on news that the Trump administration is considering restricting exports of semiconductor design software to China, fell by 1.42% and 1.61%, respectively.