Renewed Tariff Uncertainty May Lead To Initial Sell-Off On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a sharply lower open on Tuesday, with stocks likely to see further downside following the pullback seen in the previous session.

Renewed trade uncertainty may weigh on Wall Street after the U.S. Court of Appeals for the Federal Circuit ruled most of President Donald Trump's global tariffs are illegal.

In a 7-4 decision, the appeals court ruled that the power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution.

However, the court delayed implementation of its order until October, giving the Trump administration time to appeal the decision to the Supreme Court.

"All tariffs are still in effect!" Trump said in a post on Truth Social. "If these tariffs ever went away, it would a total disaster for our country."

Treasury yields have surged in reaction to the ruling amid concerns the government may have to repay the billions of dollars already brought in through Trump's tariffs.

After trending higher for several sessions, stocks moved back to the downside during trading on Friday. The major averages all moved lower on the day, with the tech-heavy Nasdaq posting a particularly steep loss.

The major averages ended the day off their lows of the session but still in negative territory. The Nasdaq slumped 249.61 points or 1.2 percent to 21,455.55, the S&P 500 slid 41.60 points or 0.6 percent to 6,460.26 and the Dow dipped 92.02 points or 0.2 percent to 45,544.88.

With the pullback on the day, the major averages closed slightly lower for the week. The S&P 500 edged down by 0.1 percent, while the Dow and the Nasdaq both slipped by 0.2 percent.

The weakness on Wall Street may partly have reflected profit taking, as some traders looked to cash in on the recent strength in the markets.

Trading has been somewhat choppy over the past few sessions, but the S&P 500 still managed to end Thursday's trading at a new record closing high.

Meanwhile, traders have seemingly shrugged off a typically closely watched Commerce Department report showing U.S. consumer prices increased in line with estimates in the month of July.

While the data has increased confidence the Federal Reserve will lower interest rates next month, a September rate cut may already have been priced into the markets.

CME Group's FedWatch toll is currently indicating an 87.1 percent chance the Fed will lower rates by a quarter point at its next monetary policy meeting.

The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.2 percent in July after climbing 0.3 percent in June. The uptick matched expectations.

The annual rate of growth by the PCE price index in July came in unchanged from June at 2.6 percent, which was also in line with estimates.

Excluding food and energy prices, the core PCE price index rose by 0.3 percent in July, matching the increase seen in June as well as expectations.

The annual rate of growth by the core PCE price index ticked up to 2.9 in July from 2.8 percent in June. The slight acceleration also matched estimates.

Traders also kept an eye on developments in Washington, D.C., where a District Court Judge held a hearing on Federal Reserve Governor Lisa Cook's request to temporarily block President Donald Trump's attempt to remove her from her position.

The hearing ended without District Judge Jia M. Cobb issuing a ruling, leaving Cook's fate up in the air going into the long weekend.

Semiconductor stocks turned in some of the market's worst performances on the day, dragging the Philadelphia Semiconductor Index down by 3.2 percent.

Considerable weakness was also visible among computer hardware stocks, with the NYSE Arca Computer Hardware Index tumbling by 2.0 percent after ending the previous session at a record closing high.

Dell Technologies (DELL) helped lead the sector lower, plunging by 8.9 percent after reporting better than expected second quarter results but providing disappointing guidance.

On the other hand, gold stocks showed a strong move to the upside along with the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 3.3 percent.

Commodity, Currency Markets

Crude oil futures are jumping $1.19 to $65.20 a barrel after falling $0.59 to $64.01 a barrel last Friday. Meanwhile, after surging $41.80 to $3,516.10 an ounce in the previous session, gold futures are climbing $26.80 to $3,542.90 an ounce.

On the currency front, the U.S. dollar is trading at 148.85 yen compared to the 147.18 yen it fetched on Monday. Against the euro, the dollar is trading at $1.1617 compared to yesterday's $1.1711.

Asia

Asian stocks surrendered early gains to end on a mixed note on Tuesday, as technology stocks succumbed to profit taking in China and Hong Kong after a recent powerful rally on AI optimism.

Amid much uncertainty around tariffs and geopolitical tensions, investors awaited cues from upcoming U.S. jobs and inflation data along with the Federal Reserve's interest rate decision.

China's Shanghai Composite Index fell 0.5 percent to 3,858.13 as Beijing prepares for a grand military parade. Hong Kong's Hang Seng Index closed down 0.5 percent at 25,496.55, dragged down by technology shares.

Japanese markets rebounded from their Monday losses after a 10-year bond sale saw its strongest demand since October 2023.

The Nikkei 225 Index rose 0.3 percent to 42,310.49, snapping a two-day losing streak amid mounting political uncertainty and increased bets for Bank of Japan rate hikes.

The broader Topix Index settled 0.6 percent higher at 3,081.88 after Bank of Japan Deputy Governor Ryozo Himino's speech provided few clues on the future direction of interest rates.

Takashimaya rallied 3.3 percent and J.Front Retailing surged 4.3 percent as investors cheered positive sales reports by department stores.

Seoul stocks advanced as foreigners snapped their five consecutive sessions of selling. The Kospi jumped 0.9 percent to 3,172.35.

Major tech shares rebounded after plunging in the previous session on reports that a Chinese company had developed a new artificial intelligence chip. Samsung Electronics gained 2.2 percent and SK Hynix added 1.8 percent.

Australian stocks declined in thin trading as several energy and consumer stocks traded ex-dividend. The benchmark S&P/ASX 200 Index slipped 0.3 percent to 8,900.60 ahead of second quarter GDP data due on Wednesday. The broader All Ordinaries Index closed down 0.3 percent at 9,168.

Across the Tasman, New Zealand's benchmark S&P/NZX 50 Index climbed 0.5 percent to 13,133.16, posting its fourth consecutive session of gains.

Europe

European stocks have moved lower on Tuesday after Eurostat data showed Eurozone inflation rose to 2.1 percent last month, climbing above the European Central Bank's 2 percent target for the first time since April amid higher prices for food, alcohol and tobacco.

The euro was little changed amid bets the ECB will likely keep interest rates on hold at its September 11 meeting. Traders also shifted focus to upcoming U.S. employment data for clues on the Federal Reserve's next steps.

The German DAX Index has tumbled by 1.9 percent after climbing by 0.6 percent on Monday. Germany's 30-year yield climbed to a 14-year high, tracking a rise in U.S. Treasury yields.

France's CAC 40 Index is down by 0.6 percent ahead of a crucial confidence vote in parliament next Monday. The outcome of the vote on the government's plan to slash public spending could trigger government collapse, budget plan delays, or even snap elections.

The U.K.'s FTSE 100 Index is down by 0.7 percent as the 30-year gilt yield hit a 27-year high at 5.680 percent in early trading on rising debt concerns in a pre-budget blow for chancellor Rachel Reeves.

In corporate news, British Gas owner Centrica has fallen after announcing it has extended the life of two of its U.K. nuclear power stations in which it has a 20 percent share.

Low-cost carrier Wizz Air Holdings has also slumped despite reporting a robust 11.4 percent year-on-year increase in passenger traffic for August 2025.

Chemical company BASF is moving lower after it extended a long-term supply contract for cathode active materials produced at its Schwarzheide facility.

Nestle shares have also dipped. The Swiss food giant has dismissed Chief Executive Officer Laurent Freixe following revelations of a romantic relationship with a company staffer.

Meanwhile, DEUTZ shares have surged. The German engine manufacturer has agreed to acquire the Sobek Group, a specialist in drone propulsion systems.

U.S. Economic News

The Institute for Supply Management is due to release its report on manufacturing activity in the month of August at 10 am ET. The manufacturing PMI is expected to inch up to 48.7 in August from 48.0 in July, but a reading below 50 would still indicate contraction.

Also at 10 am ET, the Commerce Department is scheduled to release its report on construction spending in the month of July. Construction spending is expected to rise by 0.2 percent in July after falling by 0.4 percent in June.