Stock market today: Dow, S&P 500, Nasdaq sink as Treasury yields jump amid tariff, Fed uncertainty

US equities, including the Dow, S&P 500, and Nasdaq, declined on Tuesday, kicking off what is historically the worst trading month, as rising Treasury yields, with the 30-year nearing 5%, and uncertainty surrounding Trump's tariffs weighed on markets. Nvidia led tech sector losses after refuting 'sold out' AI chip reports, while Tesla also slid on demand issues. Conversely, gold reached record highs on expectations of Fed rate cuts, with investors keenly awaiting Friday's crucial jobs report for further monetary policy direction.

Analysis

US equity markets initiated September with a significant downturn, as the S&P 500 and Nasdaq Composite experienced their worst daily drops in over a month, falling 0.7% and 0.8% respectively. The sell-off was primarily driven by a surge in Treasury yields, with the 30-year yield climbing 5 basis points to near the 5.0% threshold, a level considered a headwind for stocks. This bond market pressure is compounded by notable political and legal uncertainty, specifically a federal appeals court ruling that President Trump's global tariffs were unconstitutional, creating ambiguity for corporate margins and fiscal policy. Economic data further soured sentiment, with a report showing US manufacturing contracted for the sixth consecutive month. The technology sector led the decline, with Nvidia (NVDA) falling approximately 2% after the company publicly refuted reports that its AI chips were 'sold out', a move that tempered supply constraint narratives. This follows a recent quarter where its 56% data center revenue growth still missed elevated Wall Street expectations. The AI-related trade showed further signs of strain as cloud provider CoreWeave (CRWV) dropped nearly 8%. In contrast, specific assets diverged from the negative trend. Gold (GC=F) surged to a new all-time high around $3,600 an ounce, fueled by market expectations of a Federal Reserve rate cut this month, for which traders are pricing in a 90% probability. This move lifted gold miners like Newmont (NEM). Corporate-specific news also created pockets of strength, with PepsiCo (PEP) jumping 5% on news of a $4 billion activist stake and Kraft Heinz (KHC) gaining on plans to split the company.

Key Decisions for Investors

• Given rising Treasury yields are a primary market headwind, investors should closely monitor the upcoming August jobs report, as it will be a key catalyst for the Federal Reserve's widely anticipated September rate decision.
• The pullback in high-valuation AI stocks like Nvidia and CoreWeave suggests near-term sentiment is turning cautious; however, long-term investors may consider this volatility as a potential entry point, aligning with strategist views of a structural AI-driven bull market.
• Consider positions in assets showing counter-cyclical strength, such as gold and related equities like Newmont, which are benefiting from rate cut expectations and could serve as a hedge against broader market weakness and political uncertainty.
• Pay attention to event-driven opportunities in the consumer staples sector, highlighted by positive stock reactions at PepsiCo and Kraft Heinz, which are demonstrating resilience independent of macroeconomic pressures.