U.S. Stocks Rally as AI Sector Rebounds, Supreme Court Hears Tariff Arguments
U.S. equities rose sharply today, November 5, 2025, driven by a rebound in artificial intelligence stocks and growing optimism that some of former President Trump’s tariffs may be rolled back following questioning by the Supreme Court.
The Dow Jones Industrial Average gained 305 points, a 0.7% increase, while the S&P 500 and Nasdaq Composite rose 0.7% and 0.9% respectively. Chipmaker Advanced Micro Devices led the gains, reversing an earlier dip after reporting third-quarter earnings and revenue that exceeded analyst expectations, ultimately rising 2%. Broadcom and Micron Technology also saw significant gains, jumping almost 3% and 8%, respectively, while Nvidia and Oracle recovered from losses yesterday. This comes after concerns about high valuations in the AI sector led to declines for companies like Palantir and Super Micro Devices.
Adding to the market’s positive momentum, the Supreme Court heard arguments regarding the legality of President Trump’s tariffs, specifically whether they were authorized under the International Emergency Economic Powers Act. Justices from both sides of the ideological spectrum questioned the Trump administration’s justification for the levies, raising hopes for potential changes to trade policy. Shares of Ford, General Motors, and Caterpillar – companies particularly sensitive to tariff impacts – each rose approximately 3%. As Investopedia explains, tariffs can significantly impact manufacturing and consumer prices.
Despite the gains, market strategist Phil Blancato of Osaic cautioned that the “AI trade is simply running out of steam,” and that valuations remain stretched. Stronger-than-expected ADP payroll data and an ISM services economy reading provided some economic encouragement, but also contributed to rising yields, potentially complicating expectations for a third Federal Reserve rate cut in December. “This morning’s ADP data suggests that, we are still very much in a strong labor market,” Blancato said. The outcome of the Supreme Court case and future economic data releases will likely be key factors influencing market direction in the coming months.
