U.S. stocks tumbled Tuesday as investors digested new economic data and a recent court ruling that most of President Donald Trump’s tariffs could be potentially blocked.
Why it matters: The sell-off raised concerns about the potential that more than $120 billion in tariff revenue accumulated this year might need to be refunded.
The details:
- The Nasdaq composite closed 0.8% lower, and the S&P 500 dropped 0.7%.
- The Dow Jones Industrial Average also fell 249 points.
- Trump’s tariffs will remain in effect for now as the legal process plays out, and a lower court reconsiders the case.
U.S. Treasury yields, already elevated by broader investor worries about debt levels and economies elsewhere, especially in Europe, spiked to as high as 4.97% for a 30-year U.S. government bond and 4.30% for the 10-year Treasury.
The higher Treasury yields move, the more it costs the government to borrow money.
Should tariff revenue need to be refunded, the U.S. may need to issue more Treasuries at these higher yields to pay for the refunds.
What they’re saying:
- “We are so strong now and we are so respected and … the stock market is down today because of the possibility” that tariffs could be permanently blocked, Trump told Salem Radio.
- “If we win this, the stock market is going to go right through the roof,” he added.
September is typically the worst month for stocks, and recent tariff uncertainty comes alongside fresh data showing that the U.S. manufacturing sector contracted for a sixth straight month.
Major companies are also sounding alarms about consumers.
“Everything is about to get significantly more expensive” due to high tariffs, such as the 50% applied to Brazilian goods, a food and beverage industry company told ISM.
What’s next: Trump announced that he would hold an “emergency meeting” Wednesday at the White House to discuss appealing the ruling.
