US open: Stocks sharply lower as rate cut hopes fade, Fed independence questioned

(Sharecast News) - Major indices were in the red early on Tuesday as investors reassessed the likelihood of a Federal Reserve rate cut later this month. As of 1440 BST, the Dow Jones Industrial Average was down 1.28% at 44,961.51, while the S&P 500 shed 1.26% to 6,378.70 and the Nasdaq Composite came out of the gate 1.39% weaker at 21,156.70.

The Dow opened 583.37 points lower on Tuesday, extending losses recorded in the previous session as weakness in AI-linked tech stocks and cautious inflation data prompted a broad market retreat.

While markets had priced in an 80% chance of easing, several analysts now suggest the odds are closer to 50-50, citing resilient GDP growth, stable financial conditions, and persistent inflation pressures. The shift follows Federal Reserve chairman Jerome Powell's recent remarks at Jackson Hole, which hinted at a possible rate cut but stopped short of committing, with that ambiguity triggering a bout of caution, especially with cyclical stocks outperforming defensives - suggesting investors may have overestimated the urgency for monetary easing.

Uncertainty regarding the future independence of the Federal Reserve was drawing an amount of investor attention on Tuesday after a court hearing seeking to temporarily block Trump from dismissing Fed Governor Lisa Cook concluded on Friday without a ruling. Separately, Stephen Miran, a Trump nominee to the Fed board, was due to appear before the Senate Banking Committee on Thursday.

Also in focus early on Tuesday was news that a federal appeals court has ruled that most of Donald Trump's global tariffs were unlawful, determining that only Congress holds the authority to impose broad levies. The 7-4 decision from the US Court of Appeals for the Federal Circuit was expected to be challenged, with Trump labelling the ruling "Highly Partisan" and vowing to appeal to the Supreme Court.

On the macro front, S&P Global's August manufacturing PMI will be published at 1445 BST, with the Institute for Supply Management's set to follow at 1500 BST, alongside July construction spending data.

Rostro's Joshua Mahony said: "Later today, the ISM manufacturing PMI in the US could dictate the afternoon tone. The market is braced for another sub-50 reading, although things are worse than they seem given the fact that the reading of 48 is propped up by the 64.8 prices paid element. The fact that we continue to see weakness across the employment (43.4) and new orders (47.1) metrics does highlight the cause for concern as we head into a period dominated by jobs data."

Market participants were also keeping a keen eye on a surge in bond yields to start the month, with the yield on the benchmark 10-year Treasury note jumping to 4.29%, while the 30-year yield was approaching 4.98%.

No major corporate earnings were slated for release on Tuesday.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Unitedhealth Group Inc. (UNH) $309.87 2.51% American Express Co. (AXP) $331.28 1.31% Merck & Co. Inc. (MRK) $84.12 1.09% Johnson & Johnson (JNJ) $177.17 0.98% Coca-Cola Co. (KO) $68.99 0.92% Walmart Inc. (WMT) $96.98 0.91% Procter & Gamble Co. (PG) $157.04 0.89% Chevron Corp. (CVX) $160.60 0.80% Verizon Communications Inc. (VZ) $44.23 0.68% Salesforce.Com Inc. (CRM) $256.25 0.68%

Dow Jones - Fallers

Caterpillar Inc. (CAT) $419.04 -3.65% 3M Co. (MMM) $155.53 -1.29% International Business Machines Corporation (CDI) (IBM) $243.49 -0.91% Goldman Sachs Group Inc. (GS) $745.25 -0.79% Nike Inc. (NKE) $77.37 -0.71% Boeing Co. (BA) $234.68 -0.63% Home Depot Inc. (HD) $406.77 -0.17% Intel Corp. (INTC) $24.35 0.00% Microsoft Corp. (MSFT) $506.69 0.00% Dowdupont Inc. (DWDP) $0.00 0.00%

S&P 500 - Risers

J. M. Smucker Co. (SJM) $110.51 3.55% Brown Forman Corp. Class B (BF.B) $29.94 3.35% Helmerich & Payne Inc. (HP) $20.89 3.31% Eastman Chemical Co. (EMN) $70.34 3.17% Elevance Health Inc. (ELV) $318.65 2.65% Edison International (EIX) $56.13 2.58% Unitedhealth Group Inc. (UNH) $309.87 2.51% Centene Corp. (CNC) $29.04 2.33% Lamb Weston Holdings, Inc. (LW) $57.53 2.28% Robert Half Inc. (RHI) $37.32 2.16%

S&P 500 - Fallers

Oracle Corp. (ORCL) $226.13 -5.90% Caterpillar Inc. (CAT) $419.04 -3.65% Corning Inc. (GLW) $67.03 -2.76% Amphenol Corp. (APH) $108.86 -2.75% Dollar General Corp (DG) $108.76 -2.64% Deere & Co. (DE) $478.64 -2.60% Hewlett Packard Enterprise (HPE) $22.57 -2.55% Norwegian Cruise Line Holdings Ltd (NCLH) $24.84 -2.17% NRG Energy Inc. (NRG) $145.56 -2.09% Quanta Services Inc. (PWR) $377.96 -2.07%

Nasdaq 100 - Risers

Fiserv Inc. (FI) $138.18 0.39% Marriott International - Class A (MAR) $267.86 0.00% Cisco Systems Inc. (CSCO) $69.09 0.00% CSX Corp. (CSX) $32.51 0.00% Charter Communications Inc. (CHTR) $265.58 0.00% Western Digital Corp. (WDC) $80.34 0.00% Nvidia Corp. (NVDA) $174.18 0.00% Automatic Data Processing Inc. (ADP) $304.05 0.00% Seagate Technology Plc (STX) $167.40 0.00% Mercadolibre Inc. (MELI) $2,472.91 0.00%

Nasdaq 100 - Fallers

Broadcom Inc. (AVGO) $297.39 0.00% Align Technology Inc. (ALGN) $141.96 0.00% Idexx Laboratories Inc. (IDXX) $647.09 0.00% Hologic Inc. (HOLX) $67.12 0.00% Autodesk Inc. (ADSK) $314.70 0.00% J.B. Hunt Transport Services Inc. (JBHT) $144.99 0.00% Comcast Corp. (CMCSA) $33.97 0.00% Paypal Holdings Inc (PYPL) $70.19 0.00% Adobe Systems Inc. (ADBE) $356.70 0.00% PACCAR Inc. (PCAR) $99.98 0.00%