U.S. stock futures pointed sharply lower Tuesday, suggesting a rough start for equities as investors react to renewed uncertainty surrounding trade policy.
The sell-off risk comes after the U.S. Court of Appeals for the Federal Circuit ruled that most of former President Donald Trump’s tariffs were unconstitutional, deciding in a 7-4 vote that only Congress has the authority to impose taxes such as tariffs.
Although the court delayed the ruling’s implementation until October to allow time for a Supreme Court appeal, the decision rattled markets.
“All tariffs are still in effect!” Trump wrote on Truth Social. “If these tariffs ever went away, it would a total disaster for our country.”
Treasury yields jumped in response, as investors weighed the possibility that the government could be forced to return billions collected through the tariffs.
The uncertainty comes on the heels of a rocky session Friday, when major averages reversed course after a multi-day rally. The Nasdaq was hit hardest, sliding 249.61 points, or 1.2%, to 21,455.55. The S&P 500 dropped 41.60 points, or 0.6%, to 6,460.26, while the Dow shed 92.02 points, or 0.2%, to finish at 45,544.88.
All three indexes closed slightly lower for the week, with the S&P 500 down 0.1% and both the Dow and Nasdaq off 0.2%. Analysts suggested some of the weakness reflected profit-taking after recent record-setting moves.
Despite choppy trading, the S&P 500 still managed to hit a fresh record high last Thursday.
Economic data released Friday had little impact on sentiment. A Commerce Department report showed consumer prices rose in line with expectations in July, reinforcing market confidence that the Federal Reserve will cut interest rates in September. Futures markets now place the odds of a quarter-point reduction at 87.1%.
The PCE price index increased 0.2% in July after a 0.3% gain in June, holding steady at 2.6% year-over-year. Core PCE, which excludes food and energy, rose 0.3% month-on-month, leaving the annual pace at 2.9%, up slightly from June’s 2.8%.
Meanwhile in Washington, a District Court hearing focused on Fed Governor Lisa Cook’s request to halt Trump’s attempt to remove her from the central bank’s board. Judge Jia M. Cobb did not issue a ruling, leaving the matter unresolved before the holiday weekend.
Sector performance was uneven on Friday. Semiconductor shares tumbled, sending the Philadelphia Semiconductor Index down 3.2%. Computer hardware stocks also slumped, with the NYSE Arca Computer Hardware Index dropping 2.0% from a record high. Dell Technologies (NYSE:DELL) fell nearly 9% despite beating second-quarter earnings expectations, as its outlook disappointed.
Gold miners, however, bucked the trend, rallying alongside the precious metal. The NYSE Arca Gold Bugs Index climbed 3.3%, highlighting the safe-haven appeal amid market volatility.
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