US equity markets experienced a significant downturn in early September, with major indices recording substantial losses amid a combination of legal, economic, and sector-specific factors.

Market Performance

The Dow Jones Industrial Average plummeted 542 points, marking a 1.20% decline. In tandem, the S&P 500 mirrored this drop with a 1.20% fall, while the tech-heavy Nasdaq Composite index suffered an even steeper decline of 1.40%.

Tech Sector Hit Hard

Technology stocks bore the brunt of the sell-off:

• Nvidia, a leading chip manufacturer, saw its shares sink by over 2.00%
• Palantir, the data analytics firm, experienced a sharp 3.00% slide

Trump Tariff Ruling Impact

A federal appeals court ruling significantly contributed to market volatility. The court declared most of former President Trump's global tariffs illegal, asserting that only Congress has the authority to impose such measures. Trump has indicated his intention to appeal the decision to the Supreme Court.

This ruling has far-reaching implications, particularly for India, which faces potential tariffs of up to 50.00% on various exports including:

• Textiles
• Gems
• Auto parts
• Seafood

Treasury Yields and Gold

As equity markets tumbled, other financial indicators showed notable movements:

• US Treasury yields surged, with the 10-year yield reaching 4.29%
• The 30-year yield climbed above 4.98%
• Gold prices rallied, surpassing $3,500.00 per ounce

Federal Reserve Watch

Market participants are closely monitoring the upcoming August jobs report. Current trader sentiment suggests a 90.00% probability of a 25 basis point rate cut by the Federal Reserve in September.

The confluence of these factors - the tariff ruling, tech stock declines, rising yields, and anticipation of the Fed's next move - has created a complex and volatile market environment. Investors will likely remain cautious as they await further developments and economic indicators in the coming weeks.

US equity futures rallied following impressive earnings reports from major technology companies, setting a positive tone for the market. The surge comes as the Federal Reserve maintains its current interest rate policy and former President Trump announces new trade deals.

Tech Earnings Boost Market Sentiment

Nasdaq 100 futures led the charge, climbing 1.10%, while S&P 500 futures advanced 0.80%. The upbeat mood was largely attributed to strong performances from tech giants Microsoft and Meta, whose shares surged in after-hours trading. These results underscore the continued strength and influence of the technology sector on overall market performance.

Federal Reserve Holds Steady

In a closely watched decision, the Federal Reserve maintained interest rates at the 4.25%-4.50% range in a 9-2 vote. Fed Chair Jerome Powell emphasized that no decision has been made regarding potential rate cuts in September, highlighting the central bank's cautious approach to monetary policy.

Powell's comments on solid labor markets and above-target inflation led to a strengthening of the US dollar, which gained 0.80%. In response, money markets adjusted their expectations, with less than a 50% chance now priced in for a September rate cut.

Economic Indicators Paint Mixed Picture

Recent economic data presents a nuanced view of the US economy:

• Private-sector payrolls increased by 104,000 in July, according to ADP data.
• US GDP grew at a 3.00% annualized rate in the second quarter.
• However, first-half growth averaged only 1.25%, indicating some economic headwinds.

Trump Announces New Trade Deals

Adding another layer to the economic landscape, former President Trump announced significant trade deals:

• A 15% tariff on South Korean exports, coupled with a $350 billion US investment commitment from South Korea.
• A 25% tariff on Indian exports, set to begin on Friday.

These moves could have substantial implications for international trade relations and domestic industries.

Market Outlook

The combination of strong tech earnings, steady Fed policy, and new trade developments creates a complex environment for investors. While tech stocks are showing resilience, the broader economic picture remains mixed. Investors will likely be closely monitoring upcoming economic data and any further policy developments to gauge the market's direction in the coming months.