Court flip-flop on tariffs rattles investors

Markets woke up rattled on Friday as the chaos surrounding President Donald Trump’s tariff decisions continued to wear down investor confidence.

According to data from CNBC, futures for the Dow Jones Industrial Average dropped 31 points in early morning trading, while S&P 500 futures slipped 0.16%, and Nasdaq-100 futures dipped 0.21%.

This came after a wave of uncertainty on Thursday when a federal court first blocked and then reinstated the majority of the president’s tariffs, triggering confusion across global trade desks.

The legal drama unfolded late Wednesday night when the Court of International Trade decided to freeze most of the current tariffs imposed by the administration. But by Thursday afternoon, that same court reversed course, putting a temporary hold on its own order.

Stocks recoil as legal chaos deepens

This constant policy flip-flop is throwing both markets and global trade partners into a loop. The S&P 500, which was up nearly 0.9% during early Thursday trading, turned south fast after the Trump administration hinted at a possible appeal.

The issue isn’t just whether the tariffs are good or bad, it’s that nobody knows when they’re real. That’s paralyzing for companies trying to plan shipments and for countries negotiating trade deals.

Even with the turbulence, stocks have had a solid May. The S&P 500 is still up more than 6% this month, the Nasdaq Composite has jumped 10%, and the Dow has added about 4%. For this week alone, the S&P has risen 2%, the Dow gained 1.4%, and the Nasdaq is up 2.3%.

Traders are also watching closely for inflation data. The personal consumption expenditures (PCE) index for April is expected to show annual inflation at 2.2%, with a monthly increase of 0.1%. The core PCE, which cuts out food and energy, is projected to come in at 2.6% for the year, also rising 0.1% month over month. 

Crypto drops as investors brace for inflation

Crypto markets weren’t spared either. Bitcoin dropped 2.8% and now trades at $105,430. Ether fell 4% to $2,617, XRP dropped 4.4% to $2.19, and Solana (SOL) tumbled 6%, now sitting at $162. The declines come as traders try to make sense of global economic signals that are increasingly impossible to predict.

But interestingly enough, the Crypto Fear & Greed Index is currently at 60, which is strongly Greed. Retail investors aren’t feeling good about any of it. The American Association of Individual Investors (AAII) said bearish sentiment jumped to 41.9% this week, up from 36.7% last week. 

That’s higher than the long-term average of 31%, and this marks the 26th time in 28 weeks that pessimism has outpaced the norm. On the flip side, bullish sentiment dropped to 32.9%, down from 37.7%, and sits below the historical average of 37.5% for the 16th time in 17 weeks.

In a special question, 64% of respondents said that the tariffs, along with the economy and inflation, are the top reasons they expect markets to drop in the next six months. Only 11% pointed to corporate earnings, 10% to valuations, and 9% to monetary policy or interest rates.

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