US stocks return to gains amid court hearing on illegality of Trump's duties
Some members of the Supreme Court have signaled that they may be inclined to limit some of the trade measures
Investors bought back the cheapened shares after a strong sell-off the day before. The index of the technology sector Nasdaq Composite at the end of trading on November 5 rose by 0.7%. Blue-chip index Dow Jones Industrial Average added 0.5%, broad market index S&P 500 - 0.4%.
The previous trading day was the worst for stocks in three weeks. The Nasdaq Composite lost 2% on November 4 due to a fall in securities of companies related to artificial intelligence.
Why optimism has returned to the market
Investor sentiment was first boosted by a report of renewed growth in private sector employment (ADP). After a decline in September, employment rose by 42,000 last month - much better than market expectations, Yahoo Finance notes.
The Supreme Court hearings on the duties imposed by the United States have added to the positivity. The justices must determine whether Donald Trump had the authority to impose such sweeping duties against other nations. During the hearings, at least two members of the Supreme Court, whose votes could be crucial, "signaled that they may be inclined" to limit some of the duties, Axios reported.
"Trump's duties have become a serious barrier for corporate America. Lowering them could boost corporate earnings," said Mizuho managing director Daniel O'Regan. In addition, lower inflation caused by the duties would accelerate Fed rate cuts, he added.
Simultaneously with buying stocks, investors were selling Treasury bonds on November 5. The yield on 10-year treasuries rose to 4.16% - the highest level since October 6. Potential cancellation of duties will reduce the source of income of the U.S. Treasury Department, notes Barron's.
This article was AI-translated and verified by a human editor
