Stock Market Update

[BRIEFING.COM] The stock market faces a broad-based retreat with particular weakness in its mega-cap names as investors digest the ruling by the U.S. Court of Appeals that most of President Trump's enacted tariffs are illegal. 

The ruling stated Congress holds the power to enact tariffs, though the current levies will stay in effect until October 14 to allow time for an appeal to the Supreme Court. 

Tariff revenues were touted as a way to decrease the national deficit, though the market is now left to contemplate the notion that the U.S. may have to refund its collected tariffs if the Supreme Court sides with the U.S. Court of Appeals (and Congress doesn't agree to the global tariffs). Treasury yields are up as a result, with the 10-year note yield up five basis points to 4.28%.

Stocks are also on the retreat, with the S&P 500 down 1.2%, the Nasdaq Composite down 1.5%, and the DJIA down 1.0%.

Today's losses are broad-based, with ten S&P 500 sectors trading in negative territory. Advancers outpace decliners by a nearly 4-to-1 margin on the NYSE and a nearly 3-to-1 clip on the Nasdaq. 

The information technology (-2.0%), industrials (-1.6%), real estate (-1.6%), communication services (-1.5%), financials (-1.5%), and consumer discretionary (-1.4%) sectors all trade with losses wider than 1.0%. 

Losses in the technology sector are exacerbated by continued weakness in NVIDIA (NVDA 168.10, -6.08, -3.49%) following its earnings report last week, with pressure across chipmakers pushing the PHLX Semiconductor Index down 2.6%. 

Today's losses in mega-cap names extend beyond the technology sector, as all of the "magnificent seven" names hold losses wider than 1.0%. The Vanguard Mega Cap Growth ETF is down 1.8% as a result.

Smaller-cap stocks are faring better but still on the retreat, with the Russell 2000 down 1.3% and the S&P Mid Cap 400 down 1.1%. 

Only the defensive consumer staples sector (flat) has spent the majority of today's session at or slightly above its baseline. The sector benefits from today's risk-off mentality and has successfully navigated a mixed batch of stock-specific headlines. 

Shares of PepsiCo (PEP 151.96, +3.31, +2.23%) trade higher after Elliot Investment Management confirmed a $4 billion investment in the company.

Meanwhile, Kraft Heinz (KHC 26.00, -1.96, -7.03%) trades sharply lower after announcing the company will split into two independently traded stocks, with Warren Buffett (Buffett's Berkshire Hathaway is the stock's largest shareholder) expressing disappointment in the split to CNBC in an interview.

Constellation Brands (STZ 150.68, -11.26, -6.95%) is also one of the top laggards in the S&P 500 after the company lowered its FY26 EPS guidance, citing dampened consumer demand and more volatile consumer purchasing behavior.

The CBOE Volatility Index surged 22.8% to 18.84, reflecting mounting investor anxiety as September's opening session aligns with the month's reputation for market weakness.

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