Stocks sank lower at the start of September, which is historically a weak month on Wall Street, as investors weighed the latest tariff developments and looked ahead toward a key labor market update due out Friday that could determine how the Federal Reserve handles interest rates this month.
The Dow Jones Industrial Average
The day's moves come after the U.S. Court of Appeals for the Federal Circuit ruled on Friday in a 7-4 decision that most of President Donald Trump's global tariffs are illegal, stating that only Congress has the authority to enact broad tariffs.
"The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution," the court said. "Tariffs are a core Congressional power."
Trump on Friday called the decision "Highly Partisan" and plans to appeal the ruling to the U.S. Supreme Court, writing in a Truth Social post that "with the help of the United States Supreme Court, we will use [tariffs] to benefit our nation."
U.S. Treasury Secretary Scott Bessant told Reuters on Monday that he believes the Supreme Court will rule in favor of Trump's use of a 1977 emergency law to impose his global tariffs, adding that he is preparing a legal brief for the U.S. solicitor general -- who is overseeing the administration's appeal -- that will outline the need to address trade imbalances and the fentanyl crisis.
In the news, Kraft Heinz
"The complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas," said Miguel Patricio, executive chair of the Kraft Heinz board, adding that the split would help "allocate the right level of attention and resources to unlock the potential of each brand."
Shares of PepsiCo
"Elliot's goals at PepsiCo are straightforward: help the Company sharpen focus, drive innovation, become more efficient and unlock the value that its leading brands, unmatched scale and worldclass employees deserve," the investor wrote in its letter, forecasting at least a 50% upside is the company implements its ideas. "The path back to winning is clear and achievable."
On the earnings front, Constellation Brands
The company reduced its comparable earnings per share guidance for fiscal 2026 to a range of $11.30 to $11.60 from its previous $12.60 to $12.90. Moreover, Constellation Brands expects net beer sales to fall 2% to 4% due to tariff impacts, from its prior range of flat to up 3%.
"We continue to navigate a challenging macroeconomic environment that has dampened consumer demand and led to more volatile consumer purchasing behavior since our first quarter of fiscal 2026," CEO Bill Newlands said in a statement. "Over the last several months, high-end beer buy rates decelerated sequentially, as both trip frequency and spend per trip declined."
In economic news, U.S. manufacturing contracted in August, according to data released by The Institute for Supply Management on Tuesday, marking the sixth straight month of reduced growth. The sector's headline index rose to 48.7% last month from July's reading of 48% -- readings below the neutral level of 50 indicate contraction.
Data from S&P Global Market Intelligence published separately on Tuesday showed the U.S. manufacturing sector post its strongest monthly increase since May 2022, with the firm's purchasing managers' index coming in at 53 in August from July's reading of 49.8.
S&P Global Chief Business Economist Chris Williamson said in the report that factor inventories increased throughout the month as manufacturers grew concerned over potential supply constraints and rising prices.
"These concerns are being stoked by uncertainty over the impact of tariffs, fears which were underpinned by a further jump in prices paid for inputs by factories, linked overwhelmingly by purchasing managers to these tariffs," Williamson said in the report.
"Cost increases are being passed on to customers via widespread hikes to factory gate prices," the economist added. "The big question is the degree to which these price rises will then feed through to higher consumer price inflation in the coming months."
For Wednesday, market participants will turn their attention towards earnings reports from companies including Dollar Tree
