Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.7%), Nasdaq Composite (-0.8%), and Dow Jones Industrial Average (-0.6%) closed lower in the first session of September as investors grappled with elevated valuations, seasonal concerns, and the fallout from a U.S. Court of Appeals ruling that most of President Trump’s enacted tariffs are illegal.

All current levies will remain in place until October 14 pending a potential Supreme Court appeal, with President Trump seeking an expedited ruling from the Supreme Court, according to CNBC.

Stocks largely retreated, with all eleven S&P 500 sectors spending time in negative territory, though some modest late-session buying interest saw equities improve before the close.

Eight S&P 500 sectors would finish with losses, with advancers outpacing decliners by a greater than 2-to-1 ratio on the NYSE and Nasdaq. 

The real estate (-1.7%), industrials (-1.1%), information technology (-1.0%), consumer discretionary (-1.0%), and financials (-0.7%) closed with the widest losses.

Mega-cap weakness played a pivotal role in today's early retreat, but late "buy the dip" interest saw the market's largest names lead the modest bounce off of session lows.

NVIDIA (NVDA 170.74, -3.44, -1.97%) had a particularly volatile session, trading with losses wider than 3.0% at session lows before closing just below its 50-day moving average (171.06). Semiconductor stocks as a cohort were relatively weak, though much improved from early levels, with the PHLX Semiconductor Index ultimately finishing with a 1.1% loss.

The Vanguard Mega Cap Growth ETF (-1.0%) halved its earlier losses after being down as much as 2.0% today.

The S&P 500 Equal Weighted Index (-0.9%) still slightly underperformed the market-weighted S&P 500 (-0.1%), but only by a slight margin.

Smaller-cap stocks performed slightly better than their larger counterparts, as the S&P Mid Cap 400 (-0.5%) and Russell 2000 (-0.6%) finished with more modest losses. 

As for today's winners, an outperformance in defensive sectors reflected today's risk-off sentiment. 

The health care sector (+0.1%) benefitted from a strong showing in biotech names that boosted the iShares Biotechnology ETF 1.6%, while the consumer staples sector (+0.1%) captured a similar gain despite several names trading sharply lower in response to headlines.

Kraft Heinz (KHC 26.02, -1.95, -6.97%) traded lower after the company announced it will split into two independently traded names, and Constellation Brands (STZ 151.26, -10.68, -6.60%) slipped after the company lowered its FY26 EPS guidance, citing dampened consumer demand and more volatile consumer purchasing behavior.

Elsewhere, the energy sector (+0.2%) closed as the top-performing S&P 500 sector, benefitting from crude oil futures settling today's session $1.59 higher (+2.5%) at $65.60 per barrel.

The CBOE Volatility Index jumped 14.0% to 17.51, underscoring heightened investor anxiety as September’s historically weak start lives up to expectations. With little in the way of consequential economic data or earnings releases tomorrow, it appears the market will be left to its own devices to determine if today's retreat will compound or if the late-session resilience will culminate in another record-setting rally.

U.S. Treasuries began the Labor Day-shortened week with losses across the curve, though intraday action saw all tenors rise off their opening lows. The 2-year note yield settled up four basis points to 3.66%, and the 10-year note yield settled up five basis points to 4.28%. 

• Nasdaq Composite: +10.2% YTD
• S&P 500: +9.1% YTD
• DJIA: +6.5% YTD
• Russell 2000: +5.5% YTD
• S&P Mid Cap 400: +3.8% YTD

Reviewing today's data:

• August ISM Manufacturing Index 48.7% (Briefing.com consensus 48.6%); Prior 48.0%
  • The key takeaway from the report is that the new orders index bounced back into expansion territory following six straight months of contraction; however, the overall activity for the manufacturing sector remains in a disappointing mode of contraction.
• July Construction Spending -0.1% (Briefing.com consensus 0.2%); Prior -0.4%
  • The key takeaway from the report is that the softness in July was led by private nonresidential spending, although private residential spending (+0.1%) wasn't exactly strong either.
• August S&P Global U.S. Manufacturing PMI -Final 53.0; Prior 53.3