Good morning. Markets closed higher yesterday following surprise rulings from two federal courts that called into question President Trump’s legal authority to impose many of the sweeping tariffs announced earlier this spring. An appeals court later granted a stay, keeping those tariffs in place for now. Uncertainty around trade policy remains elevated, but the judicial check briefly improved market sentiment, especially after strong earnings from NVIDIA lifted the broader tech space. Meanwhile, GDP data for the first quarter was revised slightly higher, though it still showed an economic contraction. Traders are now bracing for this morning’s Core PCE inflation report—arguably the most important data point of the week.

Also on watch: Fed Chair Powell’s meeting with President Trump yesterday, which the Fed characterized as policy-neutral and apolitical. Bond yields pulled back sharply, the dollar weakened, and crypto fell, with Bitcoin dropping under $106,000. Investors are also closely watching Senate negotiations around the tax bill and how OPEC+ plans to approach July production quotas.

Court Challenges Trump’s Tariff Strategy
The WSJ reports that a U.S. trade court ruled President Trump exceeded his authority in enacting many of the tariffs imposed in April, though an appeals court has temporarily allowed them to remain in effect.
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Musk Reasserts Control Over Empire
Elon Musk returned to center stage this week, reaffirming his leadership across Tesla, SpaceX, and X, as outlined in an in-depth WSJ profile.
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Powell Meets with Trump
The Federal Reserve confirmed that Chair Jerome Powell met with President Trump at the White House to discuss the economic outlook, reiterating the Fed’s independence.
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U.S.-China Talks Stall
CNBC reports that progress in U.S.-China trade negotiations has stalled and may now require a direct meeting between President Trump and Chinese President Xi Jinping.
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Tax Weaponization Ahead?
CNBC reports that the U.S. is considering invoking Section 899 to tax foreign investors in ways that could have sweeping global implications.
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Bulls Face a June Test
Bloomberg notes that after a massive May rally, markets may face a reckoning in June amid policy headwinds and investor exhaustion.
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U.S. stocks edged higher Thursday as markets digested a flurry of legal, corporate, and economic developments. The S&P 500 added 0.6%, the Nasdaq gained 0.3%, and the Dow closed up 0.8%, lifted by easing bond yields and strength in mega-cap tech. NVIDIA’s better-than-expected earnings and upbeat outlook supported AI-related names, though gains faded into the close. Sector performance was mixed, with energy lagging as oil prices declined. International markets were uneven—Asia finished broadly higher, while Europe slipped on weaker sentiment data.

Economic reports offered a mixed picture. First-quarter GDP was revised slightly upward to a -0.2% annualized contraction, helped by stronger investment, but personal consumption slowed more than expected. Initial jobless claims rose to 240,000—above consensus and the highest in three weeks—while continuing claims also ticked up. Despite these signs of modest labor market softening, overall employment conditions remain stable, with job openings still near parity with the number of unemployed.

Treasury yields fell sharply after a strong 7-year auction and weaker growth data, with the 10-year yield settling at 4.43%. The dollar retreated against major currencies, weighed down by uncertainty around U.S. trade policy following twin court rulings against the Trump administration’s tariffs—though an appeals court later paused enforcement. Gold advanced 0.65% to $3,343.90, while WTI crude fell 1.46% to $60.94 amid expectations of increased OPEC+ supply.

Markets appear to be treading water ahead of today’s PCE inflation print, which could re-anchor expectations for the Fed’s next move. Meanwhile, the legal back-and-forth on tariffs, cooling labor market data, and an evolving tax policy debate are all driving cross-asset volatility. For now, resilient corporate earnings and a modest upward GDP revision have helped maintain stability, but investor attention is squarely focused on whether inflation trends justify a shift in monetary policy—and whether fiscal and trade surprises can be absorbed without derailing the rally.