US stocks closed lower on Wednesday as uncertainty over President Donald Trump's trade tariffs and the possibility of a rate cut prompted investors to be cautious.
Uncertainty over Trump's tariffs intensified after a US appeals court ruled over the weekend that most of the tariffs were invalid, insisting that only Congress has the authority to pass levies.
Trump quickly criticized the court's decision and said he would take the case to the Supreme Court.
While the Supreme Court's decision has the potential to ease economic disruptions, it also risks adding uncertainty to trade deals between the US and its partners that could require renegotiation.
Trump's tariffs, which took effect in August, have imposed levies ranging from 10% to 50%.
However, analysts expect the tariffs to be borne by domestic importers, which risks adding to US inflationary pressures in the coming months.
The S&P 500 index fell 0.6% to 6,460.26 points, the Dow Jones fell 0.2% to 45,544.88 points, while the technology-focused Nasdaq fell 1.2% to 21,455.55 points.
In other developments, the Personal Consumption Expenditures (PCE) Price Index announced last Friday remained high, raising doubts about the prospects of an interest rate cut by the Federal Reserve (Fed).
Fed Chairman Jerome Powell said in August that the central bank is considering a rate cut in September while warning of persistent inflation risks.
According to CME FedWatch, the market is now pricing in an 86.6% chance that the Fed will cut interest rates by 25 basis points in September.
