Review & Preview: Tariff Questions

Nov 05, 2025 18:02:00 -0500 by Megan Leonhardt | #Markets #Review & Preview

The New Tariff Trade. There might be a modified version of the TACO trade back in action.

Stocks rallied on Wednesday after some of the Supreme Court’s more conservative justices appeared skeptical of President Donald Trump’s authority to issue tariffs during oral arguments in a case challenging the levies.

The tech-heavy Nasdaq Composite gained 0.7% on the day. The Dow Jones Industrial Average climbed 226 points, or 0.5%. The S&P 500 closed up 0.4%.

My colleagues Reshma Kapadia and Joe Light listened in to the nearly three-hour hearing today at the Supreme Court (and covered it here in case you didn’t have time to tune in). Essentially, the case centers around whether Trump improperly used the International Emergency Economic Powers Act to impose levies on America’s trading partners.

The verdict? We’ll have to practice some patience, as it could take some time before we get final word from the court. But questions from the justices today—which don’t always reveal how they’ll vote—seemed to cast doubt on Trump’s approach to tariffs.

As my colleagues reported:

In a notable exchange, Chief Justice John Roberts, a Republican appointee, appeared to join with the liberal justices in asserting that tariffs are a form of taxation. The government has argued to the contrary that tariffs are part of the president’s foreign-affairs powers, because the Constitution gives the power to tax to Congress rather than the president.

“Yes, of course, tariffs are in dealings with foreign powers, but the vehicle is imposition of taxes on Americans, and that has always been the core power of Congress,” Roberts said. Roberts expressed doubt that the tariffs didn’t represent a major power that needed to be explicitly delegated by Congress.

Justices Amy Coney Barrett and Neil Gorsuch, also Republican-appointed members of the Court, asked pointed questions of the government, as well.

That said, even if the Supreme Court rules against the tariffs, the Trump administration does have other options—albeit with additional restrictions—to dole out levies on imports.

It may not be Trump doing the reversal this time, but another subsequent softening of tariffs could lead to a market rebound. Trump’s tariff turnarounds, coined “Trump Always Chickens Out,” or TACO, was a favorite Wall Street trade this year.

It’s time for something new. May we suggest GUAC, or “Give Up Actually Caring.”

Readers, we’re counting on you to come up with something better. Reply to this email with ideas.

Company

Last

Chg

Chg%

Dow Jones Industrial Average

47,311.00

225.76

0.48%

S&P 500 Index

6,796.29

24.74

0.37%

NASDAQ Composite Index

23,499.80

151.16

0.65%

Market Data as of

The Hot Stock: Solstice Advanced Materials +10.7%
The Biggest Loser: Zimmer Biomet Holdings -15.2%

Best Sector: Consumer Discretionary +1.2%
Worst Sector: Consumer Staples -0.1%

Created with Highcharts 9.0.1Wednesday, Nov. 5Index performanceSource: FactSet

Created with Highcharts 9.0.1Nov. 5-0.4-0.200.20.40.60.81.01.21.4%Nasdaq CompositeDow industrialsS&P 500

Private Sector Rebound

Remember when we thought 100,000 monthly payroll gains was a relatively slow period? Those were the days. We did get a much-needed pickup in private-sector job growth, but the recovery proved to be fairly tepid—and nowhere near the 100,000 mark.

The U.S. added 42,000 jobs to private payrolls last month, according to the ADP National Employment Report released Wednesday morning. That was a stronger print than economists surveyed by FactSet were expecting, with the consensus estimate calling for 37,500 jobs added in October. The rebound was a reversal from the revised 29,000 positions ADP reported companies shed in September.

But last month’s hiring momentum wasn’t exactly strong, nor was it particularly broad-based. The services side of the labor market delivered most of the gains, led by 47,000 positions added to the trade, transportation, and utilities sector, marking the strongest reading since February 2023. The education and healthcare sector, a stalwart in hiring for much of this year, added 26,000 jobs.

Job growth in professional business services, information, and leisure and hospitality declined for the third straight month.

Wednesday’s data also showed differences in hiring between small and large businesses. Companies employing at least 250 workers added 76,000 jobs, the bulk of the payroll gains seen last month. Small and midsize businesses employing less than 250 workers, however, shed approximately 35,000 jobs overall.

“While it’s slim pickings for labor market data right now, Wednesday’s ADP update at least gave investors some reassurance that the jobs market isn’t falling apart,” writes Bret Kenwell, eToro U.S. investment analyst.

These fairly lackluster employment conditions could be enough, however, to push Fed policymakers to implement another interest-rate cut at the December 9-10 meeting.

Payroll data from ADP, the private payroll processor, have gained prominence in recent months because most federal economic data aren’t available. And even if the government shutdown ends in the next week, the Bureau of Labor Statistics could need time to get the data together for the October jobs report—potentially delaying the payroll data until after the December confab.

“In that case, this release—while imperfect—suggests the labor market has at least stabilized in recent months, but still lacks real momentum,” writes Thomas Ryan, North America economist for Capital Economics.

The Calendar

Airbnb, Air Products & Chemicals, Akamai Technologies, AstraZeneca, Becton Dickinson, Camden Property Trust, Consolidated Edison, ConocoPhillips, Cummins, Datadog, DuPont, EOG Resources, EPAM Systems, Evergy, Expedia Group, Insulet, Kenvue, Mettler-Toledo International, Microchip Technology, Moderna, Monster Beverage, News Corp, NRG Energy, Parker-Hannifin, Ralph Lauren, Rockwell Automation, Solventum, Tapestry, Take-Two Interactive Software, Trade Desk, Viatris, Vistra, Warner Bros. Discovery, Wynn Resorts, and Block report earnings tomorrow.

What We’re Reading Today

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