US stocks end lower following court ruling throwing Trump tariffs into doubt

ISTANBUL

US stocks closed lower on the first trading day of the week after an appeals court ruled Friday that most of US President Donald Trump's tariffs were illegal.

The Dow on Tuesday fell 0.55%, or 249.07 points, to close at 45,295.81. On Monday, the markets were closed due to Labor Day.

The Nasdaq dropped 0.82%, or 175.92 points, to close at 21,279.63. The S&P 500 was down 0.69%, or 44.72 points, to 6,415.54.

Meanwhile, the Volatility Index (VIX), also known as the “fear index," surged 6.51% to 17.17.

Additionally, investors anticipated a spike in bond rates beginning in September. While the 30-year yield surpassed 4.97%, the 10-year Treasury yield surged to 4.27%.

The downturn followed the US Federal Court of Appeals ruling which found that Trump does not have the authority to implement most of his 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.”

To give the Trump administration time to petition the Supreme Court to overturn the verdict, the appeals court postponed implementation of its decision until Oct. 14.

Trump on Tuesday said he will ask the Supreme Court for a fast-track ruling in order to reverse the appeals court decision as soon as possible.

“If you take away tariffs, we could end up being a third-world country,” Trump told reporters at the White House.

“We’re going to be going to the Supreme Court, we think tomorrow, because we need an early decision,” Trump stated, saying the “financial fabric of our country” is at stake.

The president also argued that Friday's decision was the reason why US stocks fell on Tuesday, saying: “They want the tariffs.”

Other analysts blamed the drop on the uncertainty over tariffs, not a stance for or against the trade levies.

In other news for the markets, the ISM manufacturing purchasing managers' index (PMI) rose to 48.7% in August, up 0.7 percentage points from July, but below market expectations.

Shares of US food and beverage company PepsiCo rose 1.1% following news that Elliott Investment Management had acquired a nearly $4 billion stake in the company.

Shares of food firm Kraft Heinz fell nearly 7% after the announcement that the company was planning to split into two separate companies.