Traders work on the floor of the New York Stock Exchange in New York City.
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U.S. stocks closed lower on Tuesday, with investors weighing the latest developments on the trade front to kick off a seasonally poor month for equities. Rising yields also worried investors.
The Dow Jones Industrial Average ended down 249.07 points, or 0.55% to close at 45,295.81. The S&P 500 dropped 0.69% to settled at 6,415.54, while the Nasdaq Composite slid 0.82% to close at 21,279.63.
Investors took profits on bull market winners with the unofficial end of the summer season. Nvidia shares, for example, closed down about 2%, while other Big Tech names like Amazon and Apple shed around 1%.
The moves come after a federal appeals court on Friday ruled that most of Trump’s global tariffs are illegal. The U.S. Court of Appeals for the Federal Circuit determined in a 7-4 ruling that only Congress has the authority to apply sweeping levies. Trump called the decision “Highly Partisan” and has said that he will appeal the ruling to the U.S. Supreme Court.
Investors were also eying a surge in bond yields to start September. The 10-year Treasury yield jumped to 4.27%, while the 30-year yield topped 4.97%.
Bond investors were driving yields higher on the prospect that the U.S. may have to refund the billions brought in from tariffs, worsening the country’s already-stressed fiscal situation.
Those developments could weigh on sentiment to start a new trading month. September is historically the worst month for equities, with the S&P 500 averaging a 4.2% drop over the last five years, and falling more than 2% on average over the last 10.
“A 30-year Treasury of 5% is a headwind, no doubt about it,” Ross Mayfield, investment strategist at Baird Private Wealth Management, told CNBC. “I think it’ll continue to be a thorn in the side of equities that are trading at fairly stretched valuations.”
Wall Street is coming off a strong month for the stock market. The S&P 500 rose nearly 2%, climbing above 6,500 for the first time. The big event traders are waiting for is the release of August’s jobs report on Friday and how it will influence the Fed’s interest rate decision coming mid-month.
August saw the S&P 500 add five new all-time highs, putting the index’s year-to-date total at 20, Sam Stovall of CFRA Research noted.
“For those years in which the S&P 500 tallied 20 or more new highs through the end of August, the S&P 500 continued to post an average decline in September,” the firm’s chief investment strategist said. “The market may surrender some recent gains in the near term as it awaits new catalysts.”
