Weekly Market Update: Wall Street’s Tariff Whiplash Week
Global equities just navigated a jarring mix of legal drama, softer growth, and lingering AI jitters – and still managed to finish the week higher. In the US, the Supreme Court’s decision to strike down President Trump’s sweeping “Liberation Day” tariffs flipped markets from red to green, helping the S&P 500 gain about 1.1% and the Nasdaq 1.5% for the week.
Under the surface, investors are digesting a slower US economy, sticky inflation, and the next wave of AI-related earnings, with Nvidia and Walmart now in focus. For now, the message from markets is: policy risk is back, growth is cooling – but the bull market isn’t broken.
What’s Happening 📊
Tariffs overturned, markets cheer (for now).
The US Supreme Court ruled that Trump overstepped his authority in imposing broad “Liberation Day” tariffs using emergency powers, invalidating a swathe of import duties.
The ruling sparked an intraday reversal: on Friday, the S&P 500 rose about 0.7%, the Dow 0.5%, and the Nasdaq 0.9% as trade‑exposed names rallied.
Affected firms like Costco and Toyota are now eyeing the chance to recoup an estimated 170 billion dollars in levies already paid.
But a new tariff threat is already on the table.
In a press conference, Trump vowed to push for a new “10% global tariff” using different trade legislation, keeping trade uncertainty firmly alive.
The dollar slipped and transport stocks briefly outperformed as markets tried to reprice the new regime.
Growth disappoints, inflation doesn’t.
US Q4 2025 GDP grew just 1.4% versus expectations around 2.5%, a sharp slowdown from 4.4% in Q3 – largely blamed on the record 43‑day government shutdown.
At the same time, the Fed’s preferred core PCE inflation measure came in hotter than expected, complicating hopes for rapid rate cuts.
From “AI scare trade” to partial recovery.
After two rough weeks – including the S&P 500’s worst weekly drop since November and a 2%+ Nasdaq slide on AI disruption fears – major indices finally snapped the losing streak.
This week, communication services and industrials led gains in the US, while defensive sectors like consumer staples and utilities lagged, signalling a tentative rotation back into risk.
Select tech names bounced: Alphabet climbed more than 2–4% on the day of the tariff ruling, and AI‑linked chipmakers like Micron moved higher on datacenter demand optimism.
The data‑and‑earnings conveyor belt keeps rolling.
Around three‑quarters of S&P 500 companies have now reported, with roughly 75% beating earnings expectations, above the historical average.
Next up: Walmart and Deere – key read‑throughs on the US consumer and industrial capex – plus Nvidia, Salesforce, Snowflake and others as the next big AI reality check.
Why It Matters 🧠
Trade policy risk is back at the center of equity pricing.
The Supreme Court ruling delivered a short‑term relief rally for import‑heavy companies and globally exposed multinationals – essentially a one‑day unwind of some “tariff anxiety”. But Trump’s immediate call for a 10% global tariff resets the longer‑term question: how stable are global supply chains and corporate margins, really? Tariff policy can hit profitability, inflation, and earnings multiples all at once.The economy is slowing from “very hot” to “just warm”.
The GDP miss shows that growth momentum is fading, even before the full impact of higher rates and political uncertainty bites. That matters for stocks because:Too hot: the Fed stays hawkish, valuations compress.
Too cold: earnings estimates get cut.
“Warm but cooling” – where we seem to be now – keeps the soft‑landing narrative alive, but with less margin for policy or earnings mistakes.
AI fears have shifted from FOMO to “who loses?”
Recent weeks saw a 2 trillion dollar+ wipeout in software market caps as investors realised not every tech or services firm is a winner from generative AI. The selloff has spread from software into wealth management, insurance, real estate services, and trucking, as markets price in the risk that high‑fee, process‑heavy industries get disrupted first.
This week’s bounce shows positioning had become stretched, but analysts still warn the “AI scare trade” may not be over.Market leadership is changing.
Strategists point out that while mega‑cap tech and AI darlings are wobbling, international stocks, value names, energy, materials and non‑tech sectors with solid EPS growth are quietly outperforming year‑to‑date. That broadening of market breadth is usually healthy – but it also punishes concentrated, growth‑only portfolios.
Where’s the Opportunity? 💡
None of this is individual advice, but thematically this week highlights a few angles:
Diversification away from a single “AI winners only” bet.
The market has started to separate AI winners, potential losers, and over‑hyped passengers.
Quality non‑tech sectors with solid earnings – think industrials, energy, select financials and healthcare – have delivered stronger EPS growth than parts of tech, and have benefited from the rotation out of expensive software.
A portfolio tilted only to software or US mega‑cap growth is now explicitly a “disruption loser” risk trade – something to be sized deliberately rather than by default.
Leaning into broader equity breadth (carefully).
With large caps, mid caps, and small caps all positive this week, and growth, blend, and value all up, the tape is signaling more balanced leadership.
Broad exposure via diversified equity indices (US + international) can capture this shift without trying to time every sector rotation.
Tariff‑sensitive names: from headwind to selective tailwind.
The Supreme Court ruling reduces a specific cost overhang for import‑heavy companies and global supply‑chain players – retailers, autos, transport, and some industrials.
However, Trump’s push for a new global tariff means this is not a clean, one‑way bullish story. The more obvious opportunities are in well‑capitalised, globally diversified firms that can re‑route supply chains and negotiate pricing power, rather than in highly levered or single‑country operators.
Preparing for the next AI earnings inflection.
Nvidia’s upcoming results are now a de facto referendum on the AI capex cycle, with hyperscalers signalling major increases in AI spend and Nvidia’s CEO calling demand for the Blackwell platform “off the charts”.
Volatility around these prints can create short‑term overshoots and undershoots in AI bellwethers and related ETFs – useful for investors who rebalance systematically rather than chase headlines.
Fixed income as a shock absorber, not just a drag.
With 10‑year Treasury yields around 4.1% and the Fed likely still cutting later this year (but not urgently), high‑quality bonds are again behaving like a partial hedge when equities wobble on AI or policy scares.
For multi‑asset investors, that strengthens the case for keeping duration and credit quality intentional, rather than parking everything in cash.
Bottom Line 📌
This week’s action compressed three big stories into one tape:
Tariffs – relief from a court ruling, replaced almost instantly by a new global‑tariff threat.
Macro – a slower, but still growing US economy with inflation that’s not yet tame enough for the Fed to relax.
AI – a market that’s finally pricing in losers as well as winners, after a long period where “AI on the slide” was enough to justify any valuation.
For investors, the message is less about calling the next weekly move and more about portfolio design: diversify your sources of return, don’t overpay for growth that’s now under AI scrutiny, and assume policy headlines – especially on trade – will keep driving short‑term swings.
Disclaimer: This article constitutes the author’s personal views and is for entertainment and educational purposes only. It is not to be construed as financial advice in any form. Please do your own research and seek advice from a qualified financial advisor. From time to time, I have positions in all or some of the mentioned stocks when publishing this article. This is a disclosure - not a recommendation to buy or sell stocks.
The tension you identify between the GDP miss and the hot PCE print is the crux of the macro setup going into this week's earnings. A 1.4% Q4 GDP print largely blamed on the government shutdown is arguably a one-time distortion — but core PCE staying sticky limits the Fed's room to react if growth deteriorates further. The more interesting read for equity investors is the market's response to the tariff court ruling: a one-day relief rally immediately followed by a new tariff threat suggests the market is beginning to treat trade policy as a persistent regime condition, not an event-driven shock. That behavioral shift in pricing matters more than the headline ruling itself. Nvidia's print on Wednesday now carries double weight — it has to validate the AI capex thesis and provide visibility into a quarter where macro headwinds are real.