On Monday night, U.S. stock futures remained relatively unchanged as investors assessed the latest developments in the trade arena. This cautious sentiment comes at the start of September, a month historically recognized as challenging for equities. The Dow Jones Industrial Average futures saw a modest increase of 41 points, translating to a rise of 0.09%. Similarly, S&P 500 futures increased by approximately 0.12%, while Nasdaq 100 futures added 0.13% to their values.
These market movements follow a significant ruling from a federal appeals court on Friday, which deemed that most of President Donald Trump's global tariffs are illegal. In a decisive 7-4 ruling, the U.S. Court of Appeals for the Federal Circuit concluded that only Congress holds the authority to impose extensive tariffs. President Trump has labeled the decision as "highly partisan" and plans to appeal the ruling to the U.S. Supreme Court.
An important aspect of this ruling is its potential to influence market dynamics. Aniket Shah, the head of sustainability and transition strategy at Jefferies, noted that a Supreme Court ruling against the use of the International Emergency Economic Powers Act (IEEPA) for reciprocal tariffs could mitigate the risk of widespread tariff escalation, which would be beneficial for the market. However, the uncertainty surrounding the need to renegotiate some trade agreements may dampen investor sentiment as the new trading month begins.
September is generally viewed as the worst month for equities, with the S&P 500 averaging a drop of 4.2% over the last five years and suffering a more than 2% decline on average over the past decade. Compounding this uncertainty are ongoing concerns regarding the future of Federal Reserve independence, especially in light of the Trump administration's attempts to remove central bank officials. A recent court hearing aimed at temporarily preventing Trump from firing Lisa Cook concluded on Friday without a ruling.
This week, the focus will also be on Stephen Miran, a Trump nominee, who is scheduled for a Senate Banking Committee hearing on September 4.
Despite the prevailing uncertainties, Wall Street concluded August on a strong note. The 30-stock Dow rose by more than 3% during the month, while the S&P 500 experienced a nearly 2% increase. The tech-heavy Nasdaq ended August with a gain of 1.6%, marking it as the fourth consecutive month of gains for the S&P 500.
Looking ahead, traders are eagerly anticipating the release of August's jobs report on Friday. This report will be crucial in shaping the Federal Reserve's interest rate decision slated for mid-month, adding another layer of significance to the current market dynamics.
