Stocks Stumble Into September as Tariff Turmoil Sends Yields Toward 5%

Wall Street came back from the long weekend in a mood. A fresh legal twist on tariffs and a pop in Treasury yields knocked stocks lower Tuesday, handing the market its classic rough start to September.

The scoreboard:

• Dow: −327 pts (−0.7%)
• S&P 500: −0.9%
• Nasdaq Composite: −1.1% — its first back-to-back 1% slide since early April, when President Trump rolled out sweeping tariffs on “liberation day.”

A federal appeals court ruled Friday that most of Trump’s global tariffs are illegal, saying Congress—not the White House—has the power to levy broad duties. The ruling keeps the tariffs in place for now, but it raises an awkward possibility: refunds. If the government has to give back a big chunk of tariff revenue, it could mean more borrowing at higher rates—and that’s exactly what the bond market priced in.

• 10-year yield: up to 4.27%
• 30-year yield: flirting with 5% (4.97%)

As yields climb, stock valuations feel heavier, especially for the high-multiple tech crowd.

Investors used the informal end of summer to trim winners.

• Nvidia fell almost 3%; Amazon and Alphabet dropped >1%.
• The Nasdaq 100 slipped below its 50-day moving average for the first time since April—technicians call that a short-term downtrend.

Volatility perked up too: the VIX popped into the high teens.

Macro cross-currents:

• ISM manufacturing: 48.7 in August (sixth straight month in contraction territory), but a touch better than expected.
• Jobs report Friday is the next big catalyst, feeding into the Fed’s mid-month decision. Markets still lean toward a rate cut, but sticky yields are a thorn for equities “trading at fairly stretched valuations,” as Baird’s Ross Mayfield put it.

And looming over everything: September’s reputation. Over the last 5 years, the S&P 500 has averaged a 4.2% drop in September (about −2% over the last decade). Even in years with 20+ new highs by August (which 2025 delivered), history says September often gives back some gains.

Movers & shakers:

• Frontier (ULCC): +13% after Spirit filed Chapter 11 again; Deutsche Bank upgraded Frontier, citing route overlap and market share potential.
• PepsiCo: +~3% after reports Elliott Management took a ~$4B stake.
• Kraft Heinz (KHC): −7% after confirming a split into two companies—and after Warren Buffett called the move “disappointing.”
• Constellation Brands (STZ): −8% on a guidance cut, flagging softer demand.
• Bitcoin: up ~1% to reclaim $111,000, lagging gold, which hit a record high as investors hunted classic havens.

August was no slouch—S&P 500 up nearly 2%, notching five fresh all-time highs last month and 20 for the year. Bank of America says the “AI spend” story and resilient earnings still support stocks overall. But near-term, higher long yields and tariff uncertainty are a one-two punch that makes dip-buying less automatic.

For now, the market’s message is simple: 5% on the long bond is a problem, and tariff chaos is not the catalyst bulls wanted to kick off a month that’s already infamous for rough patches.

With input from CNBC, NBC News, Reuters, and the Financial Times.