Stock Market Overview for February 20, 2026: Supreme Court Ruling Boosts Markets

Market Recap

On February 20, 2026, US stock markets experienced a surge after the Supreme Court ruled that President Trump's sweeping tariffs under the International Emergency Economic Powers Act (IEEPA) were unlawful. The decision led to a nearly 0.7% increase in the S&P 500, a 0.5% gain for the Dow Jones Industrial Average, and an almost 0.9% rise in the tech-heavy Nasdaq Composite. This ruling was seen as a bullish signal for various sectors, especially those impacted directly by tariffs.

The reversal came during a backdrop of heightened investor anxiety regarding the economy's slow growth, which expanded by just 1.4% in the fourth quarter, significantly below the anticipated 2.9%. Although these figures raised concerns over economic health, investor sentiment improved following the legal challenge to Trump's tariffs, which many viewed as burdensome on businesses.

Tariff Developments and Market Reaction

Despite the positive market response to the Supreme Court's ruling, President Trump quickly announced a new 10% global tariff to replace the duties invalidated by the court. This move aimed to enact similar measures under Section 122 of the Trade Act of 1974, and analysts are now closely monitoring how these changes will affect the economy and market sentiment moving forward.

Market participants are paying attention to the potential for refunds due to the reversal of the IEEPA tariffs, with estimates suggesting it could strip the government of about $175 billion in potential revenue. As companies navigate the implications of the ruling, some sectors, including technology and retail, have begun to see positive momentum, particularly as tariffs were viewed as impediments to growth.

Sector Highlights

Following the tariff news, some retail stocks like Bob's Discount Furniture and Wayfair saw gains as tariffs on imported goods were expected to ease, allowing for more competitive pricing. Technology stocks, particularly those linked with AI and data centers, also observed a rebound, with Nvidia positioned to report earnings next week, drawing attention from investors eager for insights into the industry's future.

Conversely, cybersecurity stocks faced pressures due to concerns surrounding recent developments in AI, specifically regarding cybersecurity innovations that could disrupt existing business models. CrowdStrike and Zscaler stocks dipped following announcements that raised competitive fears in the sector.

Conclusion

Overall, while the immediate market reaction was optimistic with positive closes in major indices, uncertainties linger regarding the sustainability of this rally in light of economic growth numbers and new tariff policies. As investors brace for upcoming earnings reports from significant players like Nvidia, all eyes will be on how these developments shape the market in the coming weeks.