US stocks ended lower as investors reassessed the future of President Donald Trump's tariffs, following a Federal Appeals Court ruling that most of them were invalid.
The court ruling unsettled investors after the long Labor Day holiday, coupled with September, traditionally a weak month for equity markets.
The Cboe Volatility Index - a gauge of Wall Street's fear - rose, but major stock indexes managed to recover from daily lows.
Investors also awaited Friday's NFP jobs report to gauge whether a fourth straight month of job growth slowdown in August would continue.
The Dow Jones Industrial Average fell 0.55% to 249.07, the S&P 500 fell 0.69% to 44.72, and the tech-focused Nasdaq Composite fell 0.82% to 175.92.
According to CME FedWatch, US interest rate futures are expecting the Federal Reserve (Fed) to cut interest rates this month, with a 92% probability of a 25 basis point cut at the end of a two-day policy meeting on September 17.
Meanwhile, Kraft Heinz shares fell 7% after the company announced plans to split into two entities – one focused on groceries and the other on sauces and spreads.
PepsiCo shares rose 1.1% after Elliott Management disclosed a $4 billion stake in the beverage company, sparking an activist campaign.
Volume on US exchanges was $16.41 billion, compared with an average of $16.26 billion over the full 20-day trading period.
