Wall Street ends lower as ruling on Trump tariffs raises concerns

Wall Street started off September on a sharply lower note on Tuesday as investors weighed the future of President Donald Trump’s tariffs after a federal appeals court ruled most of his sweeping tariffs illegal.

A divided U.S. appeals court made the ruling on Friday, but allowed for the levies to be in place until October 14. Trump on Tuesday said his administration will ask the Supreme Court for an expedited ruling on the tariffs.

The appeals court ruling rattled investors after the long Labor Day holiday weekend, with September traditionally a weak month for equities. The Cboe Volatility Index - Wall Street’s fear gauge - rose, but the major stock indexes ended off their worst levels of the day.

With the ruling, “the question becomes, ‘Has the Trump administration alienated our trading partners as well as given up the revenue from tariffs?’ That’s what’s plaguing markets,” said Oliver Pursche, senior vice president and adviser for Wealthspire Advisors in Westport, Connecticut.

“By the same token, it’s too early to call this the beginning of a great correction,” he said. “At the end of the day, we all know that August-September tend to be more volatile and a little more challenging for investors before we get into the fourth quarter, which tends to be a pretty solid one.”

Data going back decades shows that, on average, September is the worst month for U.S. stocks, and some investors are bracing for another bumpy ride this year.

In addition, investors are anxious to see the monthly U.S. payrolls report, due on Friday, and whether weak U.S. job growth continued for a fourth month in August.

The Dow Jones Industrial Average fell 249.07 points, or 0.55%, to 45,295.81, the S&P 500 fell 44.72 points, or 0.69%, to 6,415.54 and the Nasdaq Composite fell 175.92 points, or 0.82%, to 21,279.63.

U.S. rate futures widely expect the Federal Reserve to lower interest rates this month, pricing in a 92% chance of a 25-basis-point cut at the end of its two-day policy meeting on September 17, according to CME Group’s FedWatch.

Real estate fell 1.7% and had among the biggest S&P 500 sector declines on the day, with U.S. 30-year Treasury yields on Tuesday climbing to their highest levels since mid-July.

Also, shares of Kraft Heinz dropped 7% after the company said it will split into two companies, one focused on groceries and the other on sauces and spreads.

On the flip side, shares of PepsiCo gained 1.1% after Elliott Management disclosed a $4 billion stake in the beverages company, launching an activist campaign.

On the Nasdaq, 1,555 stocks rose and 3,099 fell as declining issues outnumbered advancers by about a 1.99-to-1 ratio There were 105 new highs and 118 new lows.

On the NYSE declining issues outnumbered advancing ones by a 2.4-to-1 ratio . There were 176 new highs and 53 new lows.

Volume on U.S. exchanges was 16.41 billion shares, compared with the 16.26 billion average for the full session over the last 20 trading days.

A slew of companies across sectors ranging from crypto to consumer launched U.S. IPO roadshows on Tuesday, kicking off the post-Labor Day fall window as investor anxiety over U.S. President Donald Trump’s tariffs started to recede.

Analysts say the window through mid-October will be crucial, with several high-profile names lining up to gauge whether confidence in equities can withstand political and economic uncertainty.

Swedish fintech Klarna, Winklevoss twins-backed crypto exchange Gemini, cafe chain Black Rock Coffee Bar, blockchain lender Figure Technology and engineering and maintenance services provider Legence made public the terms of their respective offerings.

“I believe that the strong sentiment for U.S. IPOs overall will continue for the remainder of 2025 and into 2026, in particular for growth-focused deals in technology and linked to the U.S. consumer,” IPOX CEO Josef Schuster told Reuters.

The fall stretch is traditionally one of the busiest for new deals, as markets shake off the summer lull and dealmakers rush to bring offerings when investors return after Labor Day.

Strong first-day performances this year from high-growth tech and crypto firms including stablecoin issuer Circle, space startup Firefly Aerospace and crypto exchange Bullish have reinforced optimism that the IPO market is stabilizing.

Meanwhile, U.S. stock markets hover near record highs, supporting new issuance and defying political and economic headwinds.

“As long as the (stock) market stays strong, we expect more IPOs to come,” said Bo Pei, analyst at US Tiger Securities.