Stocks Slide Amid Trade Concerns and Rising Bond Yields

New York City, NY — U.S. stocks fell on Tuesday as investors reacted to trade uncertainties and rising bond yields, starting September on a weak note. The Dow Jones Industrial Average dropped 525 points, or 1.2%, while the Nasdaq Composite and the S&P 500 fell 1.5% and 1.9%, respectively.

The declines followed a ruling from a federal appeals court on Friday, which deemed President Donald Trump‘s tariffs largely illegal. The U.S. Court of Appeals for the Federal Circuit ruled 7-4 that only Congress has the authority to impose such tariffs. Trump criticized the decision as ‘highly partisan’ and stated he plans to appeal to the U.S. Supreme Court.

Concerns about rising bond yields added to market pressures. The yield on the 30-year Treasury note increased to 4.27%, while the 10-year note surpassed 4.97%. Investors are anxious that rising yields may worsen the already strained fiscal situation in the U.S.

September has historically been a challenging month for stocks, with the S&P 500 averaging a 4.2% decline over the past five years. Ross Mayfield, an investment strategist at Baird Private Wealth Management, acknowledged that a 5% yield on the 30-year Treasury is ‘a headwind’ for equities with high valuations.

Despite September’s ominous reputation, Bank of America’s quantitative strategist Nigel Tupper expressed optimism. He indicated that the overall outlook remains supportive for equity market returns, with expectations that rates may fall and strong global earnings.

Looking ahead, traders are closely monitoring the upcoming jobs report for August, which will likely influence the Federal Reserve’s interest rate decision later this month. The S&P 500 reached five all-time highs in August, totaling 20 highs for the year, according to Sam Stovall of CFRA Research.

Federal economic data also revealed that the U.S. manufacturing sector has contracted for six straight months, with the ISM manufacturing index rising to 48.7 in August, still below the growth line of 50.

As the market unfolds, investors face uncertainty, compounded by the volatility of the stock market and mixed forecasts from analysts.