The US stock market is poised for a tentative start on Friday, January 9, as investors prepare for two significant events that could dictate the direction for the world's premier financial hub. The resilience shown by Wall Street after a tariff-induced dip in April now faces a crucial examination.
Supreme Court Verdict and Economic Data in Focus
Traders are primarily focused on the US Supreme Court, which is scheduled to deliver its judgment later today on the legality of tariffs imposed by President Donald Trump. This comes alongside the keenly awaited US non-farm payrolls report, which may offer clearer signals on the Federal Reserve's potential interest rate cuts, following recent ambiguous economic indicators.
Upon commencing his second term in January 2025, Trump revived his aggressive trade policy, this time aiming at a broader group of nations, including India, thereby disrupting a global trade order that had been stable for decades. In April, he announced tariffs ranging from 10% to 50%.
Legal challenges followed, with lower federal courts already ruling that many of these tariffs overstepped presidential authority, arguing that the power to levy such broad import duties constitutionally rests with Congress, not the President. The Supreme Court will now decide if Trump can use the International Emergency Economic Powers Act (IEEPA) to justify these tariffs without congressional approval.
Analysts Predict Major Setback for Trump
Market experts believe there is a strong possibility the Supreme Court will rule against the President. Avinash Gorakshkar, a SEBI-registered fundamental equity analyst, stated that US markets are likely to trade sideways to negative in anticipation of an adverse ruling for Trump.
He warned that if the court rules against the administration, the US government could be forced to refund $192 billion collected in tariffs in 2025 and an additional $65 billion from 2026. This massive outflow is expected to exert pressure on the US dollar and could fuel inflation, dealing a blow to an economy already grappling with a $38 trillion debt burden.
Echoing this sentiment, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, also sees a high probability of the verdict going against Trump. He emphasized that the market's reaction will hinge on the specifics—whether the tariffs are partially or entirely struck down. A full declaration of illegality could trigger a rally in Indian markets, which have been severely impacted by the 50% tariffs.
Technical Charts Signal Potential Breakouts
Amid the fundamental uncertainties, technical analysis presents a cautiously optimistic picture for Wall Street indices. Anshul Jain, Head of Research at Lakshmishree, pointed to bullish patterns across key benchmarks.
He noted that the Dow Jones has broken out from a 38-day cup-and-handle formation, supported by its rising moving averages and strong volume, suggesting fresh buying interest. This setup could propel the index toward 50,500 in the near term.
Similarly, the Nasdaq is compressing within a 66-day triangle pattern, showing signs of a bullish resolution. A sustained breakout above 25,800 could open the path toward 26,600. The S&P 500 has also confirmed a breakout from a cup-and-handle pattern near 6,925, with the potential to advance toward 7,040 if the momentum holds.
Jain concluded that the overall risk-reward remains favourable as long as these indices stay above their key support levels, with any minor dips likely to attract buyers rather than trigger sustained selling.
