United States benchmarks retreated on Tuesday (Wednesday AEST), with investors retreating from equities amid renewed tariff uncertainty and climbing bond yields.
The Dow Jones Industrial Average fell 249.1 points or 0.6% to 45,295.8. The S&P 500 dropped 44.7 points or 0.7% to 6,415.5, while the Nasdaq Composite slipped 175.9 points or 0.8% to close at 21,279.6.
The pullback followed a significant legal development on U.S. trade policy. A federal appeals court ruled on Friday that most of President Donald Trump’s global tariffs are unconstitutional, finding in a 7-4 decision that only Congress can impose such sweeping levies.
Trump denounced the ruling as “Highly Partisan” and pledged to appeal to the U.S. Supreme Court. Investors worried the ruling could lead to billions in tariff refunds, worsening fiscal pressures.
Bond markets reacted strongly, with yields climbing sharply. The 2-year Treasury yield rose 0.6% to 3.641%, the 10-year gained 0.8% to 4.265%, and the 30-year advanced 0.7% to 4.963%. The rise in yields added further pressure to equities, particularly high-growth stocks.
Economic data offered mixed signals. The ISM manufacturing index for August improved slightly to 48.7, but remained below the 50-point threshold that signals expansion and fell short of expectations.
New orders provided a bright spot, rising to 51.4 after six months of contraction, though production fell back to 47.8. Prices remained in expansion, albeit at a slower pace, while the employment index improved modestly to 43.8 but still reflected weakness.
Attention now turns to the August jobs report due Friday, which could prove pivotal for the Federal Reserve’s upcoming mid-September policy decision.
