LIVE MARKETS-Wall Street starts September in the red, tariffs in focus

By Sinéad Carew

NEW YORK, Sept 2 (Rtrs) - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com.

WALL STREET STARTS SEPTEMBER IN THE RED, TARIFFS IN FOCUS

Wall Street's three major indexes started September trading with declines of more than 1%. While losses eased after the morning's batch of economic data, indexes were still lower.

Investors were grappling with fresh worries after the long weekend following a U.S. appeals court Friday ruling that most of Donald Trump's tariffs are illegal, undercutting the Republican president's use of the levies as a key international economic policy tool.

While investors have worried that Trump's high tariffs would put hefty upward pressure on inflation, fears that tariffs already paid could potentially have to be paid back, if the ruling stands, pushed Treasury yields higher and weighed on stocks.

"Conceptually, this should be a positive for the stock market, but it just adds another layer of uncertainty on top of uncertainty, on top of uncertainty," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, suggesting that investors appeared worried that the U.S. could have to raise more debt to pay back tariff payments received.

The latest economic data showed that U.S. manufacturing contracted for a sixth straight month in August as factories continued to grapple with the impact of import tariffs, but an artificial intelligence spending boom was lending support to some segments of the industry.

And elsewhere, U.S. construction spending fell in July as high mortgage rates continued to constrain the housing market.

Of the 11 S&P 500 industry sectors, all were in the red with industrials .SPLRCI and tech .SPLRCT vying for the biggest declines. Healthcare .SPXHC, energy .SPNY and Consumer staples .SPLRCS were among the smallest losers with some support from PepsiCo PEP.O providing by far the biggest boost after activist investor Elliott Management disclosed a $4 billion stake in the soft drinks maker.

Here is your morning snapshot from about 10:37 a.m ET/ 1437 GMT:

(Sinéad Carew)

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