Financial markets welcomed a U.S. court ruling that blocks President Donald Trump from imposing sweeping tariffs on imports under an emergency-powers law.

U.S. futures jumped early Thursday and oil prices rose more than $1. The U.S. dollar rose against the yen and euro.

The court found the 1977 International Emergency Economic Powers Act, which Trump has cited as his basis for ordering massive increases in import duties, does not authorize the use of tariffs.

The White House immediately appealed and it was unclear if Trump would abide by the ruling in the interim. The long term outcome of legal disputes over tariffs remains uncertain. But investors appeared to take heart after the months of turmoil brought on by Trump's trade war.

The future for the S&P 500 was up 1.5% while that for the Dow Jones Industrial Average gained 1.2%.

In early European trading, Germany's DAX gained 0.5% to 24,160.75. The CAC 40 in Paris jumped 0.9% to 7,860.67. Britain's FTSE was nearly unchanged at 8,722.63.

Japan's Nikkei 225 index jumped 1.9% to 38,432.98. American's largest ally in Asia has been appealing to Trump to cancel the tariffs he has ordered on imports from Japan and to also stop 25% tariffs on steel, aluminum and autos.
A U.S. Customs and Border Protection technician examines overseas parcels after they were scanned at the agency's overseas mail inspection facility at Chicago's O'Hare International Airport on Feb. 23, 2024.

The ruling also pushed the dollar sharply higher against the Japanese yen. It was trading at 145.40 yen early Thursday, up from 144.87 yen late Wednesday.

A three-judge panel ruled on several lawsuits arguing Trump exceeded his authority, casting doubt on trade policies that have jolted global financial markets, frustrated trade partners and raised uncertainty over the outlook for inflation and the global economy.

Many of Trump's double-digit tariff hikes are paused for up to 90 days to allow time for trade negotiations, but the uncertainty they cast over global commerce has stymied businesses and left consumers wary about what lies ahead.

"Just when traders thought they'd seen every twist in the tariff saga, the gavel dropped like a lightning bolt over the Pacific," Stephen Innes of SPI Asset Management said in a commentary.

The ruling was, at the least, "a brief respite before the next thunderclap," he said.

Elsewhere in Asia, Hong Kong's Hang Seng added 1.3% to 23,561.86, while the Shanghai Composite index gained 0.7% to 3,363.45.

Australia's S&P/ASX 200 gained 0.2% to 8,409.80.

In South Korea, which like Japan relies heavily on exports to the U.S., the Kospi surged 1.9% to 2,720.64. Shares also were helped by the Bank of Korea's decision to cut its key interest rate to 2.5% from 2.75%, to ease pressure on the economy.
Taiwan's Taiex edged 0.1% lower, and India's Sensex lost 0.2%.

On Wednesday, U.S. stocks cooled, with the S&P 500 down 0.6% but still within 4.2% of its record after charging higher amid hopes that the worst of the turmoil caused by Trump's trade war may have passed. It had been roughly 20% below the mark last month.

The Dow industrials lost 0.6% and the Nasdaq composite fell 0.5%.

Trading was relatively quiet ahead of a quarterly earnings release for Nvidia, which came after markets closed.

The bellwether for artificial intelligence overcame a wave of tariff-driven turbulence to deliver another quarter of robust growth thanks to feverish demand for its high-powered chips that are making computers seem more human. Nvidia's shares jumped 6.6% in afterhours trading.

Like Nvidia, Macy's stock also swung up and down through much of the day, even though it reported milder drops in revenue and profit for the latest quarter than analysts expected. Its stock ended the day down 0.3%.

The bond market showed relatively little reaction after the Federal Reserve released the minutes from its latest meeting earlier this month, when it left its benchmark lending rate alone for the third straight time. The central bank has been holding off on cuts to interest rates, which would give the economy a boost, amid worries about inflation staying higher than hoped because of Trump's sweeping tariffs.

Arizona prosecutors pressing the case against Republicans who are accused of trying to overturn the 2020 election results in President Donald Trump’s favor were dealt a setback when a judge ordered the case be sent back to a grand jury.

Arizona’s fake elector case remains alive after Friday’s ruling by Maricopa County Superior Court Judge Sam Myers, but it’s being sent back to the grand jurors to determine whether there’s probable cause that the defendants committed the crimes.

The decision, first reported by the Washington Post, centered on the Electoral Count Act, a law that governs the certification of a presidential contest and was part of the defendants’ claims they were acting lawfully.

While the law was discussed when the case was presented to the grand jury and the panel asked a witness about the law’s requirements, prosecutors didn’t show the statute’s language to the grand jury, Myers wrote. The judge said a prosecutor has a duty to tell grand jurors all the applicable law and concluded the defendants were denied “a substantial procedural right as guaranteed by Arizona law.”

Richie Taylor, a spokesperson for Arizona Attorney General Kris Mayes, a Democrat whose office is pressing the case in court, said in a statement that prosecutors will appeal the decision. “We vehemently disagree with the court,” Taylor said.

Mel McDonald, a former county judge in metro Phoenix and former U.S. Attorney for Arizona, said courts send cases back to grand juries when prosecutors present misleading or incomplete evidence or didn’t properly instruct panel members on the law.

“They get granted at times. It’s not often,” said McDonald, who isn’t involved in the case.

In all, 18 Republicans were charged with forgery, fraud and conspiracy. The defendants consist of 11 Republicans who submitted a document falsely claiming Trump won Arizona, two former Trump aides and five lawyers connected to the former president, including Rudy Giuliani.

Two defendants have already resolved their cases, while the others have pleaded not guilty to the charges. Trump wasn’t charged in Arizona, but the indictment refers to him as an unindicted coconspirator.

Most of the defendants in the case also are trying to get a court to dismiss their charges under an Arizona law that bars using baseless legal actions in a bid to silence critics.

They argued Mayes tried to use the charges to silence them for their constitutionally protected speech about the 2020 election and actions taken in response to the race’s outcome. Prosecutors said the defendants didn’t have evidence to back up their retaliation claim and that they crossed the line from protected speech to fraud.

Eleven people who had been nominated to be Arizona’s Republican electors met in Phoenix on Dec. 14, 2020, to sign a certificate saying they were “duly elected and qualified” electors and claimed Trump had carried the state in the 2020 election.

President Joe Biden won Arizona by 10,457 votes. A one-minute video of the signing ceremony was posted on social media by the Arizona Republican Party at the time. The document later was sent to Congress and the National Archives, where it was ignored.

Prosecutors in Michigan, Nevada, Georgia and Wisconsin have also filed criminal charges related to the fake electors scheme.

A budget airline that serves mostly small U.S. cities began federal deportation flights Monday out of Arizona, a move that’s inspired an online boycott petition and sharp criticism from the union representing the carrier’s flight attendants.

Avelo Airlines announced in April it had signed an agreement with the Department of Homeland Security to make charter deportation flights from Mesa Gateway Airport outside Phoenix. It said it will use three Boeing 737-800 planes for the flights.

The Houston-based airline is among a host of companies seeking to cash in on President Donald Trump’s campaign for mass deportations.

Congressional deliberations began last month on a tax bill with a goal of funding, in part, the removal of 1 million immigrants annually and housing 100,000 people in U.S. detention centers. The GOP plan calls for hiring 10,000 more U.S. Immigration and Customs Enforcement officers and investigators.

Avelo was launched in 2021 as COVID-19 still raged and billions of taxpayer dollars were propping up big airlines. It saves money mainly by flying older Boeing 737 jets that can be bought at relatively low prices. And it operates out of less-crowded and less-costly secondary airports, flying routes that are ignored by the big airlines. It said it had its first profitable quarter in late 2023.

Andrew Levy, Avelo’s founder and chief executive, said in announcing the agreement last month that the airline’s work for ICE would help the company expand and protect jobs.

“We realize this is a sensitive and complicated topic,” said Levy, an airline industry veteran with previous stints as a senior executive at United and Allegiant airlines.

Financial and other details of the Avelo agreement — including destinations of the deportation flights — haven’t publicly surfaced. The AP asked Avelo and ICE for a copy of the agreement, but neither provided the document. The airline said it wasn’t authorized to release the contract.

Several consumer brands have shunned being associated with deportations, a highly volatile issue that could drive away customers. During Trump’s first term, authorities housed migrant children in hotels, prompting some hotel chains to say that they wouldn’t participate.

Avelo was launched in 2021 as COVID-19 still raged and billions of taxpayer dollars were propping up big airlines. It saves money mainly by flying older Boeing 737 jets that can be bought at relatively low prices. And it operates out of less-crowded and less-costly secondary airports, flying routes that are ignored by the big airlines. It said it had its first profitable quarter in late 2023.

Andrew Levy, Avelo’s founder and chief executive, said in announcing the agreement last month that the airline’s work for ICE would help the company expand and protect jobs.

A federal judge on Thursday barred the Trump administration from deporting any Venezuelans from South Texas under an 18th-century wartime law and said President Donald Trump’s invocation of it was “unlawful.”

U.S. District Court Judge Fernando Rodriguez Jr. is the first judge to rule that the Alien Enemies Act cannot be used against people who, the Republican administration claims, are gang members invading the United States. Rodriguez said he wouldn’t interfere with the government’s right to deport people in the country illegally through other means, but it could not rely on the 227-year-old law to do so.

“Neither the Court nor the parties question that the Executive Branch can direct the detention and removal of aliens who engage in criminal activity in the United States,” wrote Rodriguez, who was nominated by Trump in 2018. But, the judge said, “the President’s invocation of the AEA through the Proclamation exceeds the scope of the statute and is contrary to the plain, ordinary meaning of the statute’s terms.”

In March, Trump issued a proclamation claiming that the Venezuelan gang Tren de Aragua was invading the U.S. He said he had special powers to deport immigrants, identified by his administration as gang members, without the usual court proceedings.

“The Court concludes that the President’s invocation of the AEA through the Proclamation exceeds the scope of the statute and, as a result, is unlawful,” Rodriguez wrote.

In an interview on Fox News, Vice President JD Vance said the administration will be “aggressively appealing” the ruling and others that hem in the president’s deportation power.

“The judge doesn’t make that determination, whether the Alien Enemies Act can be deployed,” Vance said. “I think the president of the United States is the one who determines whether this country is being invaded.”

The chair of the Congressional Hispanic Caucus, Rep. Adriano Espaillat, D-N.Y., said in a statement the judge had made clear “what we all knew to be true: The Trump administration illegally used the Alien Enemies Act to deport people without due process.”

The Alien Enemies Act has only been used three times before in U.S. history, most recently during World War II, when it was cited to intern Japanese-Americans.

The proclamation triggered a flurry of litigation as the administration tried to ship migrants it claimed were gang members to a notorious prison in El Salvador.

Rodriguez’s ruling is significant because it is the first formal permanent injunction against the administration using the AEA and contends the president is misusing the law. “Congress never meant for this law to be used in this manner,” said Lee Gelernt, the ACLU lawyer who argued the case, in response to the ruling.

Rodriguez agreed, noting that the provision has only been used during the two World Wars and the War of 1812. Trump claimed Tren de Aragua was acting at the behest of the Venezuelan government, but Rodriguez found that the activities the administration accused it of did not amount to an invasion or “predatory incursion,” as the statute requires.

“The Proclamation makes no reference to and in no manner suggests that a threat exists of an organized, armed group of individuals entering the United States at the direction of Venezuela to conquer the country or assume control over a portion of the nation,” Rodriguez wrote. “Thus, the Proclamation’s language cannot be read as describing conduct that falls within the meaning of ‘invasion’ for purposes of the AEA.”

If the administration appeals, it would go first to the New Orleans-based 5th U.S. Circuit Court of Appeals. That is among the nation’s most conservative appeals courts and it also has ruled against what it saw as overreach on immigration matters by both the Obama and Biden administrations. In those cases, Democratic administrations had sought to make it easier for immigrants to remain in the U.S.

The administration, as it has in other cases challenging its expansive view of presidential power, could turn to appellate courts, including the U.S. Supreme Court, in the form of an emergency motion for a stay pending an appeal.

The Supreme Court already has weighed in once on the issue of deportations under the AEA. The justices held that migrants alleged to be gang members must be given “reasonable time” to contest their removal from the country. The court has not specified the length of time.

It’s possible that the losing side in the 5th Circuit would file an emergency appeal with the justices that also would ask them to short-circuit lower court action in favor of a definitive ruling from the nation’s highest court. Such a decision likely would be months away, at least.

The Texas case is just one piece of a tangle of litigation sparked by Trump’s proclamation.