District Court Judge Mark Pittman, an appointee of former President Donald Trump based in Fort Worth, said the program usurped Congress power to make laws.

In this country, we are not ruled by an all-powerful executive with a pen and a phone. Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government, Pittman wrote.

He added: The Court is not blind to the current political division in our country. But it is fundamental to the survival of our Republic that the separation of powers as outlined in our Constitution be preserved.

The debt forgiveness plan would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven.

The cancellation applies to federal student loans used to attend undergraduate and graduate school, along with Parent Plus loans.

The 8th U.S. Circuit Court of Appeals had put the forgiveness plan on hold Oct. 21 while it considered an effort by the states of Nebraska, Missouri, Iowa, Kansas, Arkansas and South Carolina to block the program.

While the stay temporarily stopped the administration from actually clearing debt, the White House has encouraged borrowers to continue applying for relief, saying the court order did not prevent applications or the review of applications.

White House Press Secretary Karine Jean-Pierre said the administration disagreed with Thursdays ruling and the Department of Justice had filed an appeal. She said so far 26 million people had applied for debt relief, and 16 million people had already had their relief approved. The Department of Education would quickly process their relief once we prevail in court, she said.

The President and this Administration are determined to help working and middle-class Americans get back on their feet, while our opponents backed by extreme Republican special interests sued to block millions of Americans from getting much-needed relief, she said in a statement.

The legal challenges have created confusion about whether borrowers who expected to have debt canceled will have to resume making payments come Jan. 1, when a pause prompted by the COVID-19 pandemic is set to expire.

Economists worry that many people have yet to rebound financially from the pandemic, saying that if borrowers who were expecting debt cancellation are asked to make payments instead, many could fall behind on the bills and default.

In his order Thursday, Pittman said the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, did not provide the authorization for the loan forgiveness program that the Biden administration claimed it did.

The law allows the secretary of education to waive or modify any statutory or regulatory provision applicable to the student financial assistance programs as the Secretary deems necessary in connection with a war or other military operation or national emergency.

The administration argued that the student loan relief was thus authorized as a means of dealing with the national emergency of the pandemic. Pittman disagreed, finding that a program of such massive import required clear congressional authorization. The HEROES Act does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program, he wrote.

Pittman also rejected the governments arguments that the plaintiffs who brought the lawsuit lacked standing. Plaintiffs Myra Brown and Alexander Taylor both have student loans, but Brown is ineligible for debt relief because her loans are commercially held, and Taylor is not eligible for the full $20,000 because he didnt receive a Pell grant.

The administration said they werent harmed by the loan forgiveness program and their unhappiness that some other borrowers are receiving a greater benefit than they are did not give them grounds to sue.

Pittman said they were harmed, however, because the government did not take public comment on eligibility requirements for the program, meaning they had no chance to provide input on a program they would be at least be partially excluded from.

Reaction to the ruling was predictably mixed along political fault lines. The Student Borrower Protection Center blasted Pittman as a right-wing federal judge, saying tens of millions of student loan borrowers across the country now have their vital debt relief blocked as a result of this farcical and fabricated legal claim.

Rep. Virginia Foxx of North Carolina, the ranking Republican on the House education committee, celebrated it.

Yet another nail has been added to the coffin of President Bidens illegal student loan bailout, and hardworking taxpayers across the country are rightfully rejoicing, she said. This administration continues to operate as if its own self-appointed authority in transferring billions of dollars in student loans is legitimate, but the rule of law says otherwise.

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The S&P 500 surged 5.5%, while the Dow Jones Industrial Average leaped 1,200 points and the Nasdaq composite packed what could be a years worth of gains into one day by roaring 7.4% higher.

Prices jumped for everything from metals to European stocks as investors took the data as a sign that the worst of high inflation may finally have passed, though analysts cautioned its still premature to declare that with certainty. Even bitcoin rose to claw back some of its steep plunge from prior days caused by the crypto industrys latest crisis of confidence.

Some of the most dramatic action was in the bond market, where Treasury yields tumbled sharply as investors pared bets for how aggressive the Federal Reserve will be in hiking interest rates to get inflation under control. Such hikes have been the main reason for Wall Streets struggles this year and are threatening a recession.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82% from 4.15%. Its a dramatic move for the bond market, and the yield was on track for its biggest daily drop since 2009, according to Tradeweb. The two-year yield, which more closely tracks expectations for Fed action, fell to 4.32% from 4.62% and was on pace for its sharpest fall since 2008.

All the action stemmed from a U.S. government report showing that inflation slowed in October for a fourth straight month since hitting a peak of 9.1% in June. The reading of 7.7% was better than the 8% economists were expecting.

Perhaps more importantly, inflation also slowed more than expected after ignoring the effects of food and energy prices. Thats the measure the Fed pays closer attention to. So did inflation between September and October.

The month-on-month rate of inflation is much more informative, said Brian Jacobsen, senior investment strategist at Allspring Global Investments. On that measure, inflation is still high, but not scary high.

Slower inflation could keep the Fed off the most aggressive path in raising interest rates. Its already raised its key rate to a range of 3.75% to 4%, up from virtually zero in March.

By raising rates, the Fed is intentionally trying to slow the economy and jobs market in hopes of undercutting inflation, which hit a four-decade high in the summer. The risk is that it can create a recession if it goes too far, and higher rates drag down on prices for stocks and other investments in the meantime.

Higher rates have particularly hit high-growth tech stocks, cryptocurrencies and other investments seen as the riskiest or most expensive.

Big Tech stocks were some of the most buoyant forces on Wall Street following the inflation report. Apple rose 8.9%, Microsoft climbed 8.2% and Amazon soared 12.2%.

The Nasdaq composite, which is full of tech-oriented stocks, soared to its best day since March 2020, when Wall Street was in the midst of its frenzied recovery from the crash caused by the coronavirus. The broader S&P 500, which sits at the heart of many 401(k) accounts, had its best day since April 2020.

The S&P 500 climbed 207.80 points to 3,956.37. The Dow gained 1,201.43, or 3.7%, to 33,715.37, and the Nasdaq shot up 760.97, or 7.4%, to 11,114.15.

Homebuilders and other companies in the housing industry were also strong on hopes the Fed will take it easier on rate hikes that have already sent mortgage rates to industry-punishing levels. PulteGroup jumped 13.5%, and Lennar rose 12.6% for some of the bigger gains in the S&P 500.

Slower inflation could get the Federal Reserve to downshift the size of its rate hikes at its next policy meeting in December, after it pushed through four straight mega increases of 0.75 percentage points. That could open the way for the Fed to return to the more typical increases of 0.25 percentage points before pausing hikes completely.

Following Thursdays inflation report, traders increasingly shifted into bets for the Fed to raise rates by only 0.50 percentage points next month, instead of a bigger hike.

While Thursdays report on inflation was encouraging, analysts cautioned the Feds campaign against high inflation is likely still far from over. Inflation data has also given false hope before, only to reaccelerate again.

The Fed was adamant that it wont hit the brakes on rate hikes until inflation slows, and while the markets rally indicates investors may see light at the end of the tunnel, it will get one more reading before its decision next month, said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. Remember that even as we see a slowdown, prices remain elevated and have a long way to go before normalizing.

Another potentially market-shaking report will hit Wall Street Friday, when the latest reading arrives on how much inflation U.S. households see coming in future years. Fed Chair Jerome Powell has said hes paying particularly close attention to such expectations.

One of the reasons the Fed has been so aggressive about hiking rates is because it wants avoid a debilitating cycle where expectations for high inflation push people to change their behaviors in ways that lead to even higher inflation.

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