U.S. equities experienced a significant downturn on Tuesday, September 2, 2025, as major market indexes closed sharply lower, marking a challenging start to the traditionally volatile month of September. A broad tech sector slump, coupled with renewed uncertainty surrounding U.S. tariff policies and rising bond yields, weighed heavily on investor sentiment. This decline followed a robust August, which saw major indexes post their fourth consecutive month of gains.
Major Market Indexes See Steep Declines
The Dow Jones Industrial Average (DJIA) concluded the day down approximately 1.0%, while the broader S&P 500 (SPX) fell by around 1.3%. The tech-heavy Nasdaq Composite (IXIC) led the losses, dropping approximately 1.6% by the close. This widespread sell-off pushed the S&P 500 towards its worst single-day performance in a month.
The downturn was largely attributed to a confluence of factors. A federal appeals court ruling late Friday, which deemed many of President Donald Trump's "reciprocal" tariffs illegal, introduced a new layer of uncertainty regarding future trade policy. Although the tariffs are set to remain in effect until mid-October as the administration appeals to the Supreme Court, the news sparked concerns about potential fiscal impacts from required tariff refunds and broader trade stability.
Adding to the market's woes were rising yields in the bond market, with the 10-year Treasury yield climbing to approximately 4.27% from 4.23% late Friday. Higher bond yields often make equities, particularly growth stocks with stretched valuations, less attractive to investors. Furthermore, September has historically been a weak month for stock performance, a seasonality factor that may have further dampened investor spirits.
Key Market Events on the Horizon
Investors are keenly awaiting a series of crucial economic data releases this week that could influence the Federal Reserve's next policy moves. The highlight of the week will be Friday's release of the August jobs report, also known as the Employment Situation. This will be preceded by other labor market indicators, including the ADP Employment Report and productivity data. These employment figures will be closely scrutinized by the Federal Reserve as it considers a potential interest rate cut at its next policy meeting, expected in two weeks. Market participants are currently pricing in a high likelihood that the Fed will cut its benchmark rate this month for the first time in 2025.
Earlier today, the Institute for Supply Management (ISM) Manufacturing Index was released, indicating that U.S. manufacturing activity contracted for a sixth consecutive month in August, a development that further weighed on market sentiment.
Beyond economic data, several major companies are slated to release earnings reports. Chipmaker Broadcom (AVGO) is due to report its third-quarter earnings later this week, specifically on Thursday. Software giant Salesforce (CRM) is also expected to release earnings on Wednesday. Looking ahead, Adobe (ADBE) announced today that it will release its third-quarter fiscal year 2025 results after the market closes on Thursday, September 11, 2025.
Major Stock News and After-Hours Announcements
The tech sector was particularly hit today, with several large-cap technology and semiconductor stocks experiencing significant declines. Nvidia (NVDA), a key player in artificial intelligence, fell around 2.5% to 3.6%, acting as a significant drag on the S&P 500. Other tech giants also saw losses, including Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), and Tesla (TSLA), each down more than 1%. Microsoft (MSFT) and Meta Platforms (META) retreated roughly 1%. Chip stocks broadly faced pressure, with Arm Holdings (ARM) down 5%, and Lam Research (LRCX), ON Semiconductor (ON), and KLA Corp. (KLAC) each giving up about 3%.
Marvell Technology Inc. (MRVL) plunged significantly, with its stock price falling 18.6% after the AI-powered fabless semiconductor giant's second-quarter fiscal 2026 revenues fell short of the Zacks Consensus Estimate.
In other corporate news, Kraft Heinz (KHC) saw its shares fall after announcing plans to split into two separate companies, a decade after the initial merger. Beverage and spirits company Constellation Brands (STZ) tumbled following a warning of a slowdown in purchases of its high-end beers, particularly among Hispanic customers, leading to a slashed profit forecast for the fiscal year.
Bucking the trend, PepsiCo (PEP) surged approximately 2% to 3.5% after activist investor Elliott Investment Management announced it had taken a large stake in the company and was pushing for strategic changes to boost stock performance. Additionally, several companies saw gains after reporting stronger-than-expected earnings. Ambarella Inc. (AMBA) soared 16.8%, Affirm Holdings Inc. (AFRM) jumped 10.6%, and Autodesk Inc. (ADSK) climbed 9.1% after all three beat their respective earnings estimates. The Gap Inc. (GPS) also rose 1.5% after exceeding expectations for its second-quarter fiscal 2025 adjusted earnings.
After the market close today, Zscaler, Inc. (ZS) and HealthEquity, Inc. (HQY) are among the companies expected to report their latest quarterly earnings. Investors will be closely watching these announcements for further insights into corporate performance and forward-looking guidance amidst the current market environment.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.