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The U.S. stock market stumbled into September under pressure from two major forces: a federal court ruling that threatens to unravel years of trade policy, and a sharp rise in long-term bond yields that has investors rethinking risk. Together, these developments have triggered a wave of selling across equities, commodities, and global debt markets.
The legal shock came from a federal appeals court decision that declared key portions of former President Donald Trump’s global tariff program unconstitutional. The ruling challenges the use of emergency powers to impose sweeping import duties, arguing that only Congress has the authority to levy such taxes. While the tariffs remain in place pending a likely Supreme Court appeal, the financial implications are already reverberating through Wall Street.
If the ruling is upheld, the U.S. government could be forced to refund more than $200 billion in collected duties—an unprecedented fiscal liability that would strain Treasury resources and complicate budget planning. Investors are now weighing the possibility of increased government borrowing, which could flood the bond market and push yields even higher.
On September 3rd, all three major U.S. indexes posted losses. The Dow Jones Industrial Average fell 0.6%, the S&P 500 dropped 0.7%, and the Nasdaq Composite declined 0.8%. Technology stocks were hit hardest, with high-growth names like Nvidia and Palantir falling more than 2% and 3%, respectively. The sell-off was broad, affecting sectors from industrials to consumer discretionary.
Meanwhile, bond markets saw a dramatic shift. The 30-year Treasury yield surged to 4.98%, its highest level in months, while the 10-year yield climbed to 4.29%. These increases reflect growing concern over inflation, fiscal instability, and the potential for expanded Treasury issuance. Rising yields make borrowing more expensive for governments, corporations, and consumers—tightening financial conditions and dampening economic momentum.
The ripple effects extended beyond U.S. borders. European bond yields rose in tandem, with long-dated securities in France, Germany, and the UK hitting multi-year highs. Gold prices spiked above $3,500 per ounce as investors sought safe-haven assets, and the U.S. dollar strengthened against major currencies, including the euro and yen.
Adding to the uncertainty is the upcoming U.S. jobs report, which could influence the Federal Reserve’s next interest rate decision. While markets currently anticipate a rate cut, persistent inflation and fiscal volatility may force the Fed to hold steady or even tighten further. The central bank’s next move will be closely watched, as it could either calm or further unsettle already nervous markets.
September is historically one of the most volatile months for equities, and this year is shaping up to be no exception. With legal, fiscal, and monetary risks converging, investors are bracing for a turbulent stretch. Whether the Supreme Court intervenes quickly or delays resolution, the impact of the tariff ruling—and the bond market’s reaction—will likely shape market sentiment for weeks to come.