How the Supreme Court just juiced these S&P 500 winners – and turbocharged your 401(k)

By Charlie Garcia

U.S. companies can now see their regulatory burden get lighter – but the stock market hasn’t yet priced this in

The smartest money will be riding the deregulation wave that’s about to lift all boats.

Last Friday, while investors focused on earnings reports and Federal Reserve tea leaves, the U.S. Supreme Court quietly handed your portfolio a gift, wrapped in constitutional law.

Here’s what happened: For decades, any federal judge anywhere in the U.S. could block a president’s policies nationwide. For example, a judge in San Francisco could halt oil drilling from Alaska to Texas. A judge in Amarillo could freeze climate rules from Manhattan to Malibu. This broad judicial veto power, called a “nationwide injunction” or “universal injunction,” died a 6-3 death on Friday.

The Court’s ruling in Trump v. CASA last Friday focused on universal injunctions regarding President Donald Trump’s executive order on birthright citizenship. The majority opinion, written by Justice Amy Coney Barrett, killed universal injunctions, which also happen to be the left’s favorite tool for blocking deregulation.

For investors, this changes everything. Without federal judges blocking them, companies can be free from regulations and other restrictions. This could turbocharge both corporate profits and the stock market.

Universal injunctions were the primary weapon used to freeze Trump’s first-term deregulation agenda. Every time Trump tried to slash regulations, a single judge was able to block the effort nationwide. That game is now over. Without this tool, Trump’s pro-business policies can proceed state by state, boosting activity on the ground before opponents can react.

Your boring index fund just got game

The biggest roadblock to deregulation has disappeared, and your portfolio is about to benefit.

The biggest roadblock to deregulation has disappeared, and your portfolio is about to benefit.

By making it harder for lower courts to impose nationwide regulatory blocks, the Supreme Court just advanced every deregulatory initiative in the Trump playbook. Energy permits, financial regulations, immigration rules affecting labor markets – all can now be implemented regionally, even while litigation continues.

Think of America split into a dozen different regulatory kingdoms – one for each of the 11 geographic federal appeals circuits, plus the D.C. Circuit. A president can now implement business-friendly policies in Texas while fighting lawsuits in California. By the time any challenge is adjudicated years later, workers have been hired, the pipelines and other projects are complete, and regulations are history.

With this decision, Trump can implement pro-business policies in receptive states immediately. The result? Drilling starts, regulations end, businesses expand – even while lawsuits drag on in opposing states.

Lower compliance costs equal higher profits, and that equals higher stock prices. Though every American company’s regulatory burden will get lighter, the market hasn’t fully priced this in yet. For your investment portfolio, this means one beautiful thing: deregulation happening faster – and your 401(k) riding the wave.

The winners’ circle: sector by sector

The S&P 500 SPX should get a massive boost from business deregulation. Watch these sectors in particular, and consider exchange-traded funds (ETFs) to play them:

1. Banks (14% of the index) can finally breathe again. Think about what most hamstrings banks: capital requirements, stress tests, lending restrictions and Dodd-Frank compliance. Now, Trump can ease these rules in business-friendly states while fighting court battles elsewhere. Regional banks especially benefit.

— How to play it: The Financial Select Sector SPDR ETF XLF captures the big banks, and check out SPDR S&P Regional Banking ETF KRE for regional players.

2. Technology companies (33% of the index) are getting their biggest regulatory win in years, which could boost AI regulation, antitrust actions and content-moderation rules, among other things. Before this decision, a judge in California could halt pro-innovation policies nationwide. Now, Texas can become an AI innovation hub while California debates ethics committees. Microsoft (MSFT), Alphabet (GOOG) (GOOGL), Meta Platforms (META) and others can deploy AI products in friendly states immediately.

— Play it: Technology Select Sector SPDR XLK for the giants; VanEck Semiconductor ETF SMH for chip plays powering AI, and ARK Innovation ETF ARKK for disrupters.

3. Energy (3.0% of the index but primed to explode) sees drilling permits flow in Texas while California argues in court. Energy ETFs have been so unloved, they’re like the last kid picked for dodgeball. But when the game changes to “who can drill the fastest,” that kid becomes your MVP.

— Play it: Energy Select Sector SPDR ETF XLE for broad exposure. VanEck Oil Services ETF OIH for the drillers. SPDR S&P Oil & Gas Exploration & Production ETF XOP for explorers and producers.

4. Industrials (7.9% of the index) now see infrastructure projects move forward without nationwide blocks. Construction, machinery manufacturers and transportation companies all benefit from faster approvals.

— Play it: Industrial Select Sector SPDR XLI for broad exposure; Global X U.S. Infrastructure Development ETF PAVE for pure infrastructure, SPDR S&P Aerospace & Defense ETF XAR for defense contractors.

The crypto kicker nobody’s talking about

Here’s what else happened last week: The U.S. Federal Housing Finance Agency ordered Fannie Mae (FNMA) and Freddie Mac (FMCC) to prepare proposals for considering cryptocurrency holdings as valid assets when evaluating mortgage applicants. FHFA Director William J. Pulte announced that crypto held on U.S.-regulated exchanges could count as borrower assets. It’s not using bitcoin (BTCUSD) for mortgages, but instead recognizing a borrower’s crypto holdings in creditworthiness assessments.

Previously, you had to sell your crypto to qualify for a mortgage. Soon, your crypto account could be part of the loan consideration. Combined with the Court decision, Texas and Florida, for example, could implement these rules and traditional banks adapt and home builders see expanded buyer pools – while New York or some other state goes to court.

The Trump rally rides again

You may hate the politics, but your portfolio loves the profits.

Remember 2017? Trump’s first year in office saw the S&P 500 gain 19.4% – compared with an average of 5.7%, according to Bespoke Investment Group research. That was with judges blocking half of the new president’s moves. The S&P 500 returned more than 50% from Trump’s election through late 2019, Bespoke noted, more than double the average for U.S. presidents three years in.

This Supreme Court decision removes the biggest obstacle to Trump 2.0’s economic agenda. But let’s acknowledge the caveats. After all, there won’t be an instant transformation. Federal agencies still need to draft rules. Appeals courts will hear challenges. Some circuit courts will resist, while others embrace the new ways.

But the game has fundamentally changed. The Supreme Court made it far more difficult to stop Trump’s business agenda cold. Even partial implementation in business-friendly circuits creates competitive advantages that force other regions to follow – or watch businesses relocate.

You may hate the politics, but your portfolio loves the profits. An S&P 500 index fund will capture much of the coming gains. But adding 5%-10% in sector ETFs could accelerate your return if Trump delivers. In a world where California can have different federal rules than Texas, the smartest money won’t be on picking winners and losers – it’ll be on riding the deregulation wave that’s about to lift all boats. That is, all the boats in business-friendly states.

Charlie Garcia is founder and a managing partner of R360, a peer-to-peer organization for individuals and families with a net worth of $100 million or more. Garcia holds positions in bitcoin. Email him at charlie@R360Global.com.

Plus: This investment turned $50,000 into $23 million in 10 years. It’s still a buy.

More: Trump’s support for nuclear is enriching uranium – and powering up these energy stocks and ETFs

-Charlie Garcia

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06-30-25 0906ET

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