Even as markets rally, Trump's policymaking causes market angst
June 28 (Reuters) - As Wall Street puts April's tariff shakeout in the rearview mirror and indexes set record highs, investors remain wary of U.S. President Donald Trump's rapid-fire, sometimes chaotic policymaking process and see the rally as fragile.
The S&P 500 and Nasdaq composite index advanced past their previous highs into uncharted territory on Friday. Yet traders and investors remain wary of what may lie ahead.
Trump's April 2 reciprocal tariffs on major trading partners roiled global financial markets and put the S&P 500 on the threshold of a bear market designation when it ended down 19% from its February 19 record-high close.
This week's leg up came after a U.S.-brokered ceasefire between Israel and Iran brought an end to a 12-day air battle that had sparked a jump in crude prices and raised worries of higher inflation. But a relief rally started after Trump responded to the initial tariff panic that gripped financial markets by backing away from his most draconian plans.
JP Morgan Chase, in the midyear outlook published on Wednesday by its global research team, said the environment was characterized by "extreme policy uncertainty."
"Nobody wants to end a week with a risk-on tilt to their portfolios," said Art Hogan, market strategist at B. Riley Wealth. "Everyone is aware that just as the market feels more certain and confident, a single wildcard policy announcement could change everything," even if it does not ignite a firestorm of the kind seen in April.
Part of this wariness from institutional investors may be due to the magnitude of the 6% S&P 500 rally that followed Trump's re-election last November and culminated in the last new high posted by the index in February, said Joseph Quinlan, market strategist at Bank of America.
"We were out ahead of our skis," Quinlan said. A focus on deregulation, tax cuts and corporate deals brought out the "animal spirits," he said. Then came the tariff battles.
Quinlan remains upbeat on the outlook for U.S. stocks and optimistic that a new global trade system could lead to U.S. companies opening new markets and posting higher revenues and profits.
But he said he is still cautious. "There will still be spikes of volatility around policy unknowns."
Overall, measures of market volatility are now well below where they stood at the height of the tariff turmoil in April, with the CBOE VIX index now at 16.3, down from a 52.3 peak on April 8.
"Our clients seem to have become somewhat desensitized to the headlines, but it's still an unhealthy market, with everyone aware that trading could happen based on the whims behind a bunch of" social media posts, said Jeff O'Connor, head of market structure, Americas, at Liquidnet, an institutional trading platform.
Trading in the options market shows little sign of the kind of euphoria that characterized stock market rallies of the recent past.
"On the institutional front, we do see a lot of hesitation in chasing the market rally," Stefano Pascale, head of U.S. equity derivatives research at Barclays, said.
Unlike past episodes of sharp market selloffs, institutional investors have largely stayed away from employing bullish call options to chase the market higher, Pascale said, referring to plain options that confer the right to buy at a specified future price and date.
Bid/ask spreads on many stocks are well above levels O'Connor witnessed in late 2024, while market depth - a measure of the size and number of potential orders - remains at the lowest levels he can recall in the last 20 years.
"The best way to describe the markets in the last couple of months, even as they have recovered, is to say they are unstable," said Liz Ann Sonders, market strategist at Charles Schwab. She said she is concerned that the market may be reaching "another point of complacency" akin to that seen in March.
"There's a possibility that we'll be primed for another downside move," Sonders addded.
Mark Spindel, chief investment officer at Potomac River Capital in Washington, said he came up with the term "Snapchat presidency" to describe the whiplash effect on markets of the president's constantly changing policies on markets.
"He feels more like a day trader than a long-term institutional investor," Spindel said, alluding to Trump's policy flip-flops. "One minute he's not going to negotiate, and the next he negotiates."
To be sure, traders seem to view those rapid shifts in course as a positive in the current rally, signaling Trump's willingness to heed market signals.
"For now, at least, stocks are willing to overlook the risks that go along with this style and lack of consistent policies, and give the administration a break as being 'market friendly'," said Steve Sosnick, market strategist at Interactive Brokers.
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The Guardian
34 minutes ago
- The Guardian
US supreme court limits federal judges' power to block Trump orders
The US supreme court has supported Donald Trump's attempt to limit lower-court orders that have so far blocked his administration's ban on birthright citizenship, in a ruling that could strip federal judges of a power they've used to obstruct many of Trump's orders nationwide. The decision represents a fundamental shift in how US federal courts can constrain presidential power. Previously, any of the country's more than 1,000 judges in its 94 district courts – the lowest level of federal court, which handles trials and initial rulings – could issue nationwide injunctions that immediately halt government policies across all 50 states. Under the supreme court ruling, however, those court orders only apply to the specific plaintiffs – for example, groups of states or non-profit organizations – that brought the case. The court's opinion on the constitutionality of whether some American-born children can be deprived of citizenship remains undecided and the fate of the US president's order to overturn birthright citizenship rights was left unclear, despite Trump claiming a 'giant win'. To stymie the impact of the ruling, immigration aid groups have rushed to recalibrate their legal strategy to block Trump's policy ending birthright citizenship. Immigrant advocacy groups including Casa and the Asylum Seeker Advocacy Project (Asap) – who filed one of several original lawsuits challenging the president's executive order – are asking a federal judge in Maryland for an emergency block on Trump's birthright citizenship executive order. They have also refiled their broader lawsuit challenging the policy as a class-action case, seeking protections for every pregnant person or child born to families without permanent legal status, no matter where they live. 'We're confident this will prevent this administration from attempting to selectively enforce their heinous executive order,' said George Escobar, chief of programs and services at Casa. 'These are scary times, but we are not powerless, and we have shown in the past, and we continue to show that when we fight, we win.' The decision on Friday morning decided by six votes to three by the nine-member bench of the highest court in the land, sided with the Trump administration in a historic case that tested presidential power and judicial oversight. The conservative majority wrote that 'universal injunctions likely exceed the equitable authority that Congress has given to federal courts', granting 'the government's applications for a partial stay of the injunctions entered below, but only to the extent that the injunctions are broader than necessary to provide complete relief to each plaintiff with standing to sue'. The ruling, written by the conservative justice Amy Coney Barrett, did not let Trump's policy seeking a ban on birthright citizenship go into effect immediately and did not address the policy's legality. The fate of the policy remains imprecise. With the court's conservatives in the majority and its liberals dissenting, the ruling specified that Trump's executive order cannot take effect until 30 days after Friday's ruling. Trump celebrated the ruling as vindication of his broader agenda to roll back judicial constraints on executive power. 'Thanks to this decision, we can now promptly file to proceed with numerous policies that have been wrongly enjoined on a nationwide basis,' Trump said from the White House press briefing room on Friday. 'It wasn't meant for people trying to scam the system and come into the country on a vacation.' Justice Ketanji Brown Jackson delivered a scathing dissent. She argued that the majority's decision, restricting federal court powers to grant national legal relief in cases, allows Trump to enforce unconstitutional policies against people who haven't filed lawsuits, meaning only those with the resources and legal standing to challenge the order in court would be protected. 'The court's decision to permit the executive to violate the constitution with respect to anyone who has not yet sued is an existential threat to the rule of law,' Jackson wrote. 'Given the critical role of the judiciary in maintaining the rule of law … it is odd, to say the least, that the court would grant the executive's wish to be freed from the constraints of law by prohibiting district courts from ordering complete compliance with the constitution.' Speaking from the bench, the liberal justice Sonia Sotomayor called the court's majority decision 'a travesty for the rule of law'. Birthright citizenship was enshrined in the 14th amendment following the US civil war in 1868, specifically to overturn the supreme court's 1857 Dred Scott decision that denied citizenship to Black Americans. The principle has stood since 1898, when the supreme court granted citizenship to Wong Kim Ark, born in San Francisco to Chinese immigrant parents who could not naturalize. The ruling will undoubtedly exacerbate the fear and uncertainty many expecting mothers and immigrant families across the US have felt since the administration first attempt to end birthright citizenship. Liza, one of several expecting mothers who was named as plaintiff in the case challenging Trump's birthright citizenship policy, said she had since given birth to a 'happy and healthy' baby, who was born a US citizen thanks to the previous, nationwide injunction blocking Trump's order. But she and her husband, both Russian nationals who fear persecution in their home country, still feel unsettled. 'We remain worried, even now that one day the government could still try to take away our child's US citizenship,' she said at a press conference on Friday. 'I have worried a lot about whether the government could try to detain or deport our baby. At some point, the executive order made us feel as though our baby was considered a nobody.' The American Civil Liberties Union (ACLU) condemned the ruling as opening the door to partial enforcement of a ban on automatic birthright citizenship for almost everyone born in the US, in what it called an illegal policy. 'The executive order is blatantly illegal and cruel. It should never be applied to anyone,' Cody Wofsy, deputy director of the ACLU Immigrants' Rights Project, said in a statement. Democratic attorneys general who brought the original challenge said in a press conference that while the ruling had been disappointing, the silver lining was that the supreme court left open pathways for continued protection and that 'birthright citizenship remains the law of the land'. 'We fought a civil war to address whether babies born on United States soil are, in fact, citizens of this country,' New Jersey's attorney general, Matthew Platkin, said, speaking alongside colleagues from Washington state, California, Massachusetts and Connecticut. 'For a century and a half, this has not been in dispute.' Trump's January executive order sought to deny birthright citizenship to babies born on US soil if their parents lack legal immigration status – defying the 14th amendment's guarantee that 'all persons born or naturalized in the United States' are citizens – and made justices wary during the hearing. The real fight in Trump v Casa Inc, wasn't about immigration but judicial power. Trump's lawyers demanded that nationwide injunctions blocking presidential orders be scrapped, arguing judges should only protect specific plaintiffs who sue – not the entire country. Three judges blocked Trump's order nationwide after he signed it on inauguration day, which would enforce citizenship restrictions in states where courts had not specifically blocked them. The policy targeted children of both undocumented immigrants and legal visa holders, demanding that at least one parent be a lawful permanent resident or US citizen. Reuters contributed reporting
The Guardian
39 minutes ago
- The Guardian
Abstruse yet monumental: the scope and impact of the US supreme court's birthright citizenship ruling
The US supreme court opinion on Friday in a case challenging Donald Trump's attempt to unilaterally end the country's longstanding tradition of birthright citizenship doesn't actually rule on the constitutionality of the president's order. That question – of whether the president can do away with a right guaranteed by the the fourteenth amendment to the US constitution – is still being debated in the lower courts. Instead, the supreme court focused on the question of whether individual district court judges could block federal policies nationwide. The decision is both abstruse and monumental, experts say. It doesn't immediately change anything about how citizenship is granted in the US, and it profoundly shifts the ways in which the federal courts work. To help understand the implications of the ruling, the Guardian spoke with Efrén Olivares, vice-president of litigation and legal strategy at the National Immigration Law Center, a non-profit advocacy group. The interview has been edited for length and clarity. First, what exactly does the supreme court's ruling mean, today, for immigrants across the US who are expecting parents? The immediate impact is null. The supreme court explicitly said for the next 30 days, the executive order ending birthright citizenship will not go into effect. The right to citizenship by birth in the United States continues. Anyone born today, tomorrow, next week, two weeks from now in the US will be a citizen. We can anticipate that before those 30 days run out, there will be another ruling from one of the trial courts or district courts that will shed more light on this issue long-term. Does this mean that states and immigrant rights' groups that have sued over Trump's executive order denying birthright citizenship to the children of undocumented immigrants and foreign visitors will have to change how they are challenging the policy? There were three lawsuits filed on behalf of individuals and organizations against this executive order. All three were seeking to enjoin – which means stop – the enforcement of this executive order. Because it's an executive order of national scope, the rulings of the lower courts in these cases were national in scope, right? Then, the supreme court chimed in and said that is inappropriate for a court to block a policy nationwide, and that a court's ruling should only apply to the plaintiffs or parties right in front of them. So now, those challenging the order may move to seek a class certification, essentially to pursue a class-action lawsuit. Already, the immigration aid groups Casa and the Asylum Seeker Advocacy Project have filed an amended complaint seeking class-action relief in their challenge to Trump's birthright citizenship order. Class-action litigation has existed for years, and what that means is that now the party in front of the court is asking the court to rule not just on its own behalf, but also on behalf of everyone else similarly situated. The class-action suits are most commonly used in cases where people are seeking monetary relief – for example, in instances where there are defects in car manufacturing. In that type of case, anyone who bought this type of car between X and Y dates would be entitled to compensation. The supreme court ruling could now make class-action litigation much more common. How might the supreme court's ruling here impact other immigration cases? Because up to this point, federal judges' authority to freeze policies across the US – with so-called 'nationwide injunctions' – has served as a powerful check on executive power. It has been used to block policies instituted by both Democratic and Republican administrations. What is ironic is that the supreme court has been perfectly fine with nationwide injunctions in the past. For example, justices enjoined the Biden administration's cancellation of student loans. And they had no problem with a nationwide injunction in that case. This latest ruling on injunctions will affect any case that challenges a policy with national implications. We are particularly tracking the deployment of federal or military troops to do immigration enforcement, and continuation of unlawful, discriminatory enforcement of immigration laws on the basis of race. But this ruling will impact lots of cases. It can be immigration policy, it can be an environmental policy, it can be a voting rights policy – all of those things are regulated at the federal level. So now, if federal policy is challenged, unless it is challenged in a nationwide class-action lawsuit, a lower court's ruling would only apply in the state or states where that policy is challenged? Yes, we may have a patchwork of rulings that vary depending on what state you live in. One of the challenges to the birthright citizenship order, for example, was brought by individuals and organizations in Maryland, DC and Massachusetts. If that case is successful, but you live in Nebraska or Wisconsin or Texas, you may not have the same rights to citizenship as if you are in Maryland, DC or Massachusetts. That is totally inconsistent with our system of law for 250 years. In the supreme court's majority opinion, justice Amy Coney Barrett even alluded to the infeasibility of citizenship rules being different in different states. She summarizes the plaintiffs' argument that ''patchwork injunction' would prove unworkable, because it would require [the states] to track and verify the immigration status of the parents of every child, along with the birth state of every child for whom they provide certain federally funded benefits'. And she ultimately writes that courts can issue injunctions to ensure that a victorious plaintiff receives 'complete relief'. What exactly does that mean? I think they're trying to leave the door open for nationwide injunctions to be OK in certain contexts, and it's unclear what those contexts will be. If you have a national, nationwide class action, a nationwide injunction is the only way to give relief to everyone in the class. Still, in practice, I am worried that the language of the ruling lends itself to inconsistent applications based on the court's or the judge's political ideologies.
Glasgow Times
an hour ago
- Glasgow Times
Huge crowds mourn Iranian military chiefs and scientists killed in strikes
The caskets of Guard's chief General Hossein Salami, the head of the Guard's ballistic missile programme, General Amir Ali Hajizadeh and others were driven on trucks along the capital's Azadi Street as people in the crowds chanted 'Death to America' and 'Death to Israel'. Generals Salami and Hajizadeh were both killed on the first day of the war, June 13, as Israel launched an attack it said was meant to destroy Iran's nuclear programme, specifically targeting military commanders, scientists and nuclear facilities. Mourners during the funeral ceremony in Islamic Revolution Square in Tehran (Vahid Salemi/AP) State media reported more than a million people turned out for the funeral procession, which was impossible to independently confirm, but the dense crowd packed the main Tehran thoroughfare along the entire 4.5km (nearly three-mile) route. There was no immediate sign of Iran's Supreme Leader, Ayatollah Ali Khamenei, in the state broadcast of the funeral. The Ayatollah, who has not made a public appearance since before the outbreak of the war, has in past funerals held prayers for fallen commanders over their caskets before the open ceremonies, later aired on state television. Iranian foreign minister Abbas Araghchi was on hand, and state television reported that General Esmail Qaani, who heads the foreign wing of the Revolutionary Guard, the Quds Force, and General Ali Shamkhani were also among the mourners. Gen Shamkhani, an adviser to Ayatollah Khamenei who was wounded in the first round of Israel's attack, was shown in a civilian suit leaning on a cane in an image distributed on state television's Telegram channel. A mourner holds a poster of the Supreme Leader Ayatollah Ali Khamenei, during the funerals in Tehran (Vahid Salemi/AP) Iran's Revolutionary Guard was created after its 1979 Islamic Revolution. Since it was established, it has evolved from a paramilitary, domestic security force to a transnational force that has come to the aid of Tehran's allies in the Middle East, from Syria and Lebanon to Iraq. It operates in parallel to the country's existing armed forces and controls Iran's arsenal of ballistic missiles, which it has used to attack Israel twice during the Israel-Hamas war in Gaza. Over 12 days before a ceasefire was declared on Tuesday, Israel claimed it killed around 30 Iranian commanders and 11 nuclear scientists, while hitting eight nuclear-related facilities and more than 720 military infrastructure sites. More than 1,000 people were killed, including at least 417 civilians, according to the Washington-based Human Rights Activists group. Iran fired more than 550 ballistic missiles at Israel, most of which were intercepted, but those that got through caused damage in many areas and killed 28 people. Saturday's ceremonies were the first public funerals for top commanders since the ceasefire, and Iranian state television reported that they were for 60 people in total, including four women and four children. Authorities closed government offices to allow public servants to attend the ceremonies. Many in the crowd expressed feelings of anger and defiance. 'This is not a ceasefire, this is just a pause,' said Ahmad Mousapoor, 43, waving an Iranian flag. 'Whatever they do, we will definitely give a crushing response.' People burn a US flag as they take part in the funeral ceremony (Vahid Salemi/AP) State media published images of an open grave plot at Tehran's Behesht-e-Zahra cemetery where army chief of staff, General Mohammad Bagheri, who was killed on the first day of the war, was to be buried beside his brother, a Guards commander killed during the 1980s Iran-Iraq war. Many of the others were to be buried in their home towns. The Iranian judiciary's Mizan news agency confirmed that the top prosecutor at the notorious Evin prison had been killed in an Israeli strike on Monday. It reported that Ali Ghanaatkar, whose prosecution of dissidents led to widespread criticism by human rights groups, would be buried at a shrine in Qom. Iran has always insisted its nuclear programme is only for peaceful purposes. But Israel views it as an existential threat and said its military campaign was necessary to prevent Iran from building an atomic weapon. Ayatollah Khamenei's last public appearance was on June 11, two days before hostilities with Israel broke out, when he met Iranian parliamentarians. On Thursday, however, he released a pre-recorded video, in his first message since the end of the war, filled with warnings and threats directed toward the United States and Israel, the Islamic Republic's longtime adversaries. The 86-year-old downplayed US strikes on three Iranian nuclear sites as having not achieved 'anything significant', and claimed victory over Israel. The head of the United Nations nuclear watchdog agency, Rafael Grossi, has characterised the damage done by American bunker-buster bombs to Iran's Fordo nuclear site, which was built into a mountain, as 'very, very, very considerable'. The complexity and tenacity of Iranians is famously known in our magnificent carpets, woven through countless hours of hard work and patience. But as a people, our basic premise is very simple and straightforward: we know our worth, value our independence, and never allow anyone… — Seyed Abbas Araghchi (@araghchi) June 27, 2025 US President Donald Trump has said that he expects Iran to open itself to international inspection to verify it does not restart its nuclear programme, and White House officials have said they expect to restart talks soon with Iran, though nothing has been scheduled. Iran's parliament has voted to suspend collaboration with Mr Grossi's International Atomic Energy Agency for the time being. In a post on X on Saturday, Mr Araghchi indicated that Iran might be open to talks, but criticised Mr Trump's remarks from Friday in which the president scoffed at a warning from Ayatollah Khamenei against further US attacks, saying Iran 'got beat to hell'. 'If President Trump is genuine about wanting a deal, he should put aside the disrespectful and unacceptable tone towards Iran's Supreme Leader, Grand Ayatollah Khamenei and stop hurting his millions of heartfelt followers,' Mr Araghchi wrote.
