Daily Summary: Investors React to Nvidia Beat and Court Blocks Trump Tariffs

US equities initially surged to decline later on after mixed signals with the US500 flat, US100 down 0.3%, and US2000 rising 0.2% as strong Nvidia earnings and a federal court ruling against Trump's tariffs overshadowed weak Q1 GDP data showing a 0.2% economic contraction.

Court ruling blocks Trump's reciprocal tariffs, with the Court of International Trade ruling the president exceeded his authority under the International Emergency Economic Powers Act, sparking the viral "TACO Trade" (Trump Always Chickens Out) narrative as investors bet on buying tariff-related dips.

Nvidia soared 3.5% on stellar Q1 results that beat expectations despite an $8 billion China revenue hit from export controls, with CEO Jensen Huang highlighting four positive AI surprises including exponential growth in reasoning AI and the rescission of AI diffusion rules.

Treasury yields dropped on growth concerns with 10-year yields falling 3 basis points to 4.45% and 2-year yields declining to 3.95% as traders priced in two Fed rate cuts this year following the weak GDP revision and rising unemployment claims.

Oil prices reversed early gains with WTI crude falling 1.6% to $60.86 and Brent down 1% to $63.65 as the economic contraction data outweighed earlier optimism from API inventory draws of 4.24 million barrels and the tariff court ruling.

Dollar weakened across the board with the Dollar Index falling 0.3% as the euro gained 0.5% to $1.1350 and the yen strengthened 0.3% to 144.41 per dollar, reflecting reduced safe-haven demand after the tariff ruling.

TACO Trade gains momentum as Sevens Report analysis shows the S&P 500 has risen 2% after March tariffs, 10% from April's "Liberation Day" dip, and 11% since China tariff announcements, validating the strategy of buying Trump tariff-related sell-offs.

Mixed retail earnings paint consumer picture with Kohl's beating expectations and maintaining targets, Salesforce raising guidance on AI agent success, while Best Buy and HP cut outlooks citing tariff impacts on China imports.

Economic data shows tariff strain with Q1 GDP contracting 0.2% (better than initial -0.3% estimate) and unemployment claims rising to 240,000, while PMI data suggests Q2 growth tracking at just 1% annualized rate well below trend.

Fed speakers due today including Richmond's Barkin, Chicago's Goolsbee, and Dallas' Logan as markets price in dovish pivot amid tariff uncertainty, with two-year yields hitting session lows on rate cut expectations.

Airlines partnership and luxury slowdown highlighted corporate moves with United-JetBlue loyalty partnership and LVMH warning of continued Chinese consumer pullback, while Tesla gained after Musk confirmed leaving Trump administration role.

Market positioning remains cautious despite the rally, with Goldman Sachs and Morgan Stanley warning the tariff court ruling may have limited impact as the administration has multiple authorities to reimpose duties, keeping uncertainty elevated for equity markets.