The market started off the week on Tuesday, Feb. 17, with mixed performance.
The S&P 500, the Nasdaq composite and the Dow Jones Industrial Average all rose about 0.1%. Japan’s exports surged nearly 17% year over year in January, marking the strongest growth in over three years, largely driven by shipments to China.
The key driver is upstream industrial demand. China has been ramping up infrastructure spending and manufacturing investment, especially in semiconductors and electronic vehicle supply chains. Japan sits upstream in that supply chain, exporting capital goods. Pre-Lunar New Year front-loading likely pulled forward orders.
On Wednesday, Feb. 18, the S&P 500 increased by 0.6%, the Nasdaq went up by 0.8% and the Dow rose by 0.3%.
Mortgage rates fell to the lowest level in a month, triggering a pickup in refinancing demand. When mortgage rates drop, homeowners rush to lock in lower monthly payments, which reduces household interest expenses. However, this mainly benefits existing homeowners, not new buyers. It signals some ease in financial conditions, but does not necessarily mean housing demand is booming.
The Supreme Court struck down President Donald Trump’s global tariff program, showing that executive power on trade policy has limits. After the ruling, Trump announced a new 10% global tariff.
The S&P 500 and the Nasdaq both fell 0.3%, while the Dow dropped 0.5% Thursday, Feb. 19. The U.S. trade deficit totaled $901 billion in 2025 despite tariff measures, highlighting that tariffs did not structurally reduce the imbalance.
The key reason is macro identity, with the trade deficit reflecting the gap between domestic investment and savings.
At the corporate level, Walmart reported holiday sales growth, showing that U.S. consumers remain resilient. However, forward earnings guidance fell short of expectations. People are still shopping, but profit margins are declining as companies discount more, wage costs remain elevated as consumers are price sensitive.
On Friday, Feb. 20, the S&P 500 rose 0.7%, the Nasdaq went up 0.9% and the Dow increased 0.5%.
Trump indicated tariffs could rise to 15% under Section 122 of the Trade Act of 1974, but this move is limited to 15 days without congressional approval, which materially caps long-term implementation risk.
Before switching to Section 122, Trump had relied on the International Emergency Economic Powers Act, which gives the president broad authority to regulate the economy once a national emergency is declared.
Under IEEPA, the executive branch can restrict imports and impose financial controls without prior congressional approval. The Supreme Court ruling
effectively limited how far that emergency authority could be stretched in the trade context.
