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The President and the Congress are all very well in their way. They can say what they think they think, but it rests with the Supreme Court to decide what they have really thought.
— Theodore Roosevelt

When the Supreme Court determines what elected officials actually have on their minds, investors watch out: The justices’ rulings can have a marked impact on the stock market.

It so happens that the current court takes a conservative stance on many issues. Fundamentally, though, it doesn’t matter whether SCOTUS is left, right or centrist; what matters is the impact of their rulings. Their decrees can alter the regulatory environment for business, the strength of labor laws, the reach of environmental policies, the thrust of competition and much more.

SCOTUS eyes the SEC

This court is no different. Its recent cases could shake up the investment arena in major ways. For example, right now, it’s debating the case of a hedge fund manager accused of securities fraud.

Officials with the Securities and Exchange Commission (SEC), the body tasked with investor protection, have barred him from trading. But the court has signaled that this may have denied him due process before a traditional court of law.

If his case prevails, the justices’ decision could permanently limit the power of the SEC, setting the stage for laxer rules at the very least. It could result in an all-out wild-west atmosphere on trading floors.

The Supremes and the EPA

Today’s court is clearly no big fan of regulation. Back in June 2022, SCOTUS ruled 6-3 in favor of limiting the Environmental Protection Agency’s ability to regulate carbon emissions. That was the outcome of a case brought to the court by Republican-led states and coal companies.

The coal industry has done well since then. One reason is a shortage of supply. The market value of the U.S. coal mining industry as of April 2023 was $35 billion, perhaps in part buoyed by the court’s decision.

Ramaco Resources Inc. (METC) is one coal company that’s been on a tear in recent months. In October, the company’s stock hit a 52-week high and in November the firm posted a Q3 net income of $19.5 million, a big jump from $7.6 million in Q2.

Oil turmoil

On the other hand, last April the court declined to hear a case that would have prevented municipalities from filing lawsuits against five major oil enterprises for contributing to climate change. The lawsuits must now be heard at the state level, courts often seen as more responsive to plaintiffs.

While awaiting the state cases to play out, however, the big five oil firms—BP (BP), Shell (SHEL), Chevron (CVX), ExxonMobil (XOM) and TotalEnergies (TTE)—are doing just fine, thank you. Shell, for example, has seen its share prices shoot up by 57 percent in 2023 even as it doubles down on hydrocarbons.

But the biggest energy case before the Supremes this year could well be Loper Bright Enterprises v. Raimondo. It pits the Federal Energy Regulatory Commission (FERC), which seeks to regulate planet-warming emissions, against a group protesting a rule requiring fishing concerns to pay the salaries of FERC monitors. A decision against FERC could substantially reduce its power.

Payday heyday

On the financial services front, the court has favored a hands-off approach when it comes to reining in the practices of some businesses. In 2021, for example, the justices were unanimous in ruling against the Federal Trade Commission, which wanted a predatory payday loan company to offer restitution to some of its customers.

Inflation is fueling the success of these short-term lenders. About 12 million Americans took out payday loans last year, enduring interest rates that can run as high as 652 percent.

The Supreme Court’s ruling didn’t exactly give companies the go-ahead to continue such practices, but it might have made the market confident that these businesses were secure. World Acceptance Corp. (WRLD), one payday loan enterprise, saw its stock soar in 2022 after the SCOTUS decree.

At present, however, analysts say they expect to see a big movement in WRLD shares—but aren’t certain in which direction.

At any rate, the Community Financial Services Association, which represents payday lenders, seems to be flexing its muscles. SCOTUS will hear arguments from the group next week challenging the power of the watchdog Consumer Financial Protection Bureau. The CFPB was established after the Great Recession in hopes of preventing another financial crisis.

No question, the high court has a powerful impact on society, and investors should carefully watch the decisions handed down by the Court and how they could impact their portfolios.

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