Stocks Rise as Supreme Court Limits Presidential Tariff Power
U.S. Stock markets advanced on Friday, February 20, 2026, following a Supreme Court ruling that curbed the ability of presidents to impose broad tariffs under the International Emergency Economic Powers Act. The decision offered a boost to companies that have been burdened by the costs of tariffs and eased concerns about persistent inflation.
The S&P 500 closed up 0.7%, while the Nasdaq Composite saw a gain of 1.1%. The Dow Jones Industrial Average rose 125 points, or 0.3%, recovering from earlier losses triggered by disappointing economic data.
The Supreme Court determined that the International Emergency Economic Powers Act “does not authorize the President to impose tariffs.” The ruling’s immediate impact on previously paid tariffs remains unclear, as the court did not address whether refunds would be required.
Shares of several major companies experienced gains after the ruling. Amazon, which sources a significant portion of its goods from China, jumped 2% in trading. Other companies benefiting from the decision included Home Depot.
“In the case of Amazon specifically, a lot of their stuff is imported from China, so tariffs are going to make the prices on Amazon go up for customers, and when prices go up, people buy fewer of those things,” said Jed Ellerbroek, portfolio manager at Argent Capital Management. “No longer facing that problem is the source of excitement, I think.”
Despite the positive market reaction, analysts cautioned that the ruling may not be the final word on tariffs. The expectation is that the White House will seek alternative legal avenues to reimpose similar duties. “The next question is, then, ‘What is President Trump going to do about this?’” Ellerbroek added. “He has other options to impose tariffs — I assume he will use those. So, I think that this is an intermediate step in a pretty long story, and I guess the ball is in President Trump’s court now.”
The potential for refunds of previously paid tariffs also presents a complex issue. FBB Capital Partners senior research analyst and asset allocation strategist noted that any refunds could effectively act as a form of economic stimulus. “Now lower courts are going to have to figure out what’s going to happen to people who paid the tariffs and the government paying out big refunds,” the analyst said. “If that’s out there, that would be effectively a form of economic stimulus.”
The market’s gains came despite the release of economic data indicating slower growth in the U.S. Economy. Gross domestic product increased by 1.4% in the fourth quarter, falling short of the 2.5% growth economists had predicted. The Commerce Department attributed the slowdown in part to a government shutdown that occurred during the first half of the quarter.
Inflation also remained a concern, with the personal consumption expenditures price index – the Federal Reserve’s preferred inflation gauge – showing that core inflation held steady at 3% in December, remaining above the Fed’s 2% target.
As of Friday’s close, the Dow is on track for a marginal gain of 0.1% for the week. The S&P 500 is poised for a 0.7% weekly increase, and the Nasdaq Composite is set to end a five-week losing streak with a gain of over 1%.
