US stocks started September on the back foot, snapping the summer rally with a sharp drop on Tuesday.
The Dow Jones Industrial Average fell more than 400 points, while the S&P 500 slid 1.2%. The Nasdaq Composite led declines with a 1.5% tumble, weighed by Alphabet and Amazon, both down more than 2%.
Bond markets added pressure. The 30-year Treasury yield climbed 6 basis points to 4.97%, edging close to the symbolic 5% mark not seen since July. The 10-year rose to near 4.3%, levels traders view as a hurdle for equities.
The session followed Monday’s holiday closure, setting the stage for a packed week of economic data. Friday’s non-farm payrolls report looms largest, with job openings and private payrolls prints due in the run-up. Investors see about a 90% chance of a 25 basis point rate cut from the Federal Reserve this month, but the strength of labour data could sway bets on how deep easing might go.
Gold extended its run, trading close to $3,600 an ounce and breaking above its previous all-time high. The metal’s surge reflects growing conviction that the Fed will cut rates in September after Chair Jerome Powell signalled a willingness to move.
Political noise added another layer. A federal appeals court struck down most of Donald Trump’s global tariffs as unconstitutional, undercutting one of his signature policies. Trump vowed to take the case to the Supreme Court, while also pushing to reshape the Fed. A court hearing on whether he can remove Governor Lisa Cook concluded without a ruling.
Meanwhile, fresh data showed US manufacturing contracted for the sixth straight month in August, underscoring the fragile economic backdrop as Wall Street braces for what is historically the toughest month of the year for equities.