Stocks finished higher for the holiday-shortened week, showing resilience despite inflation and policy crosscurrents. The Nasdaq rose 1.5%, snapping a five-week losing streak, followed by the S&P 500 with a gain of 1.1% and the Dow at 0.3%. For the S&P 500, the index closed back above its 50-day moving average. However, the index has still struggled to break through the phycological threshold of 7,000.

Participation was broad. While Large Cap had gains the other two tiers of Mid- and small-cap stocks managed to move higher. At the sector level, communication services led. Consumer Discretionary, Industrials, Financials, and Information Technology also had strong returns for the week. Meanwhile, defensive areas such as consumer staples and health care lagged.

The economic calendar was packed with data that painted a mixed picture. Fourth-quarter GDP came in softer than expected at 1.4%, while inflation remained sticky. Both the headline PCE and the core measure of the reading came in slightly higher than expected. Core PCE is one of the Fed’s preferred inflation measures and the index rose 0.4% in December, keeping rate-cut expectations in check.

In political news, on Friday, the Supreme Court made a ruling on the Trump Administration’s policy on tariffs deeming it unconstitutional. As Justice Kavanaugh highlighted in his dissent, sorting out what will happen with the billions of tariff revenue that the federal government has collected will be “a mess.”

Over the weekend, President Trump issued tariffs up to 15%, the legal maximum that he could use under a different provision, for 150 days. Market Participants will continue to digest this news and what this means for the markets for the days and weeks ahead.