US stocks sank on Tuesday to start a holiday-shortened trading week, as Wall Street started to look ahead to a crucial monthly jobs update that will shape expectations for interest-rate cuts.

The Dow Jones Industrial Average (^DJI) fell roughly 1.2%, or over 500 points, while the S&P 500 (^GSPC) dropped 1.3%. The tech-focused Nasdaq Composite (^IXIC) tumbled 1.8%, marking a sour start to September after another winning month for major Wall Street stock indexes.

Treasury yields rose, with the 30-year (^TYX) jumping to near 4.97%, eyeing the key 5% level for the first time since July. The benchmark 10-year (^TNX) yield rose to near 4.3%.

Nvidia (NVDA) led megacap losses, down 2.5% in early trading. Alphabet (GOOGL, GOOG), Amazon (AMZN), and Meta (META) were all down over 2%.

Wall Street's delayed open to the week — after Monday's closure for the Labor Day holiday — comes ahead of a potentially tumultuous month, with legal drama around President Trump's tariffs and concerns over Federal Reserve independence in high focus.

Gold (GC=F) surged to above $3,500 an ounce on Tuesday to eclipse April's all-time high at one point. The latest run has been fueled by expectations that the Fed will lower interest rates this month, after Chair Jerome Powell opened the door to a reduction.

Those rate-cut bets face a key test in Friday's jobs report for August — in keen focus, after disappointing inflation data dented stocks last week. Readings on job openings and private payrolls precede the crucial report, while an update on US manufacturing on Tuesday will shed light on the economy.

Markets are pricing in roughly 90% odds of a 25 basis point rate cut in September, but this week's data could help make the case for deeper easing.

Meanwhile, investors are watching developments in Washington that could test the Fed’s independence. A court hearing last week on whether Trump can fire Fed Governor Lisa Cook ended without a ruling as the president continues to make attempts to stack the Fed's Board of Governors in his favor.

The first market moves in September also follow a potentially major legal blow to Trump’s trade agenda. A federal appeals court ruled Friday that the bulk of Trump’s sweeping global tariffs were unconstitutional. Trump blasted the decision as "highly partisan" and vowed to take the case to the Supreme Court.

US stocks sank on Tuesday to start September, which is historically the worst trading month of the year.

The Dow Jones Industrial Average (^DJI) fell roughly 1%, while the S&P 500 (^GSPC) dropped 1.3%. The Nasdaq Composite (^IXIC) plunged 1.8%, with Nvidia leading losses among the \\"Magnificent Seven\\" Big Tech stocks.

The sour start to September comes after a another winning month for major Wall Street stock indexes.

Natural gas futures fell by more than 3% early Tuesday after Russia said it signed a major agreement for a natural gas pipeline with China that will more closely tie the two countries' energy industries together.

Russia's state-owned Gazprom announced Tuesday morning in comments from top executive Alexei Miller that the corporation, among the largest energy players in Russia, signed a legally-binding agreement with Beijing to build the long-delayed Power of Sibera 2 pipeline that will move natural gas from the Siberian region of Russia to northern China, via Mongolia.

Beijing has not yet confirmed details of the announcement.

Power of Sibera 2 is projected to allow Gazprom to ship as much as 50 billion cubic meters of gas annually for 30 years, Miller said, according to Bloomberg.

The project has long been eyed by Russian president Vladimir Putin as a key step toward backfilling funds that once came from Europe before the continent drastically reduced its purchases of Russian gas in the wake of its invasion of Ukraine.

Russia accounted for 45% of Europe's gas imports in 2021; today, it accounts for just 18%, according to Reuters.

Prior to Russia's invasion, Europe had been buying as much as 150 billion cubic meters per year of Russian gas. The EU is currently considering moves that would ban Russian gas under from short-term contracts starting in June 2026 at the latest, and ban shipments under existing long-term deals by the end of 2027.

It is unclear how much China would pay for the gas pumped in via the new pipeline, but it will be a lower price than what Europe pays, Miller said.

The fall in gas prices adds to a drop of more than 26% since the start of the year as a combination of weak demand and quickly increasing stores have pushed prices consistently downward.

Nestlé Swiss-listed stock dipped just over 1% on Tuesday following the dismissal of CEO Laurent Freixe. He was fired after an investigation into an \\"undisclosed romantic relationship with a direct subordinate,\\" the food giant said.

Nestlé chairman Paul Bulcke said in a statement: \\"This was a necessary decision. Nestlé's values and governance are strong foundations of our company.\\"

Replacing Freixe is Philipp Navratil, who was serving as CEO of Nestlé Nespresso.

Shares of the Swiss food and beverage company were down 18% over the past year heading into Tuesday's trading session.

US-listed shares of Nio (NIO) rose 1.6% in premarket trading on Tuesday after the Chinese electric vehicle maker reduced its adjusted net loss amid fierce competition in China, where EV makers have been slashing prices.

The company reported an adjusted net loss of 4.12 billion yuan ($576.1 million), or a loss of 1.85 yuan ($0.25) per share, compared to expectations for a loss of 4.26 billion yuan ($597 million), or a 2.25 yuan ($0.32) loss per share.

The company delivered 72,056 vehicles in the second quarter, compared to 57,373 vehicles in the same quarter a year ago. It expects to deliver 89,000 vehicles in the third quarter, which would represent a record number of deliveries for the company.

Other US shares of Chinese EV makers were down in premarket trading, including BYD (BYDDY) and XPeng (XPEV).

Read more live coverage of corporate earnings here.

PepsiCo (PEP) stock jumped 5% in premarket trading on Tuesday after the Wall Street Journal reported that activist investor Elliott Investment Management built a $4 billion stake in the company.

According to the report, Elliott plans to use its position, which makes it one of Pepsi's top five shareholders excluding index funds, to angle for changes at the company and boost the share price.

Pepsi shares have underperformed this year as consumers drink less soda and eat fewer snacks, and as scrutiny over ingredients increases. Year to date, the stock is down 2%, compared to a nearly 10% rise in the S&P 500.

Pepsi has aimed to reverse some of these trends by leaning into other categories, such as energy drinks. Last week, the company announced it boosted its stake in energy drink maker Celsius in a $585 million deal.

Kraft Heinz (KHC) is splitting into two companies a decade after a massive merger created one of the biggest food giants in the world.

Its stock ticked up in premarket trading on Tuesday, as the company confirmed The Wall Street Journal's report last week that it was closing in on a break-up. Its share price has lagged this year, down about 9%, as its core products struggled.

Reuters reports:

One listed company will be focused on groceries and the other on sauces and spreads, the packaged foods maker said on Tuesday, seeking to jump-start growth after years of sluggish sales.

The move dismantles the decade-old merger between H.J. Heinz Co and Kraft Foods Group, which was backed by Warren Buffett's Berkshire Hathaway (BRK-B, BRK-A) and Brazilian private equity firm 3G Capital, that created a $45 billion packaged food giant.

Tuesday's announcement is also the latest in a series of corporate break-ups as price-conscious shoppers shifting to cheaper alternatives such as private-labels force companies to pursue focused strategies.

Read more here.

Here's a look at some of the top stocks trending in premarket trading:

Nvidia (NVDA) stock slid 2% premarket on Tuesday after dropping more than 3% Friday. The AI chip maker’s projected $54 billion Q3 revenue disappointed investors, sparking concerns about slowing AI spending.

Amazon.com, Inc. (AMZN) stock fell 1% before the bell on Tuesday following the news that the tech giant's sign-ups in the US failed to meet last year's total and even the company's own target, according to internal company data reviewed by Reuters.

Newmont (NEM) shares rose almost 2% on Tuesday as gold (GC=F) hit a record high, fuled by bets the Fed will cut rates later this month.

Economic data: S&P Global US manufacturing PMI (August final reading); ISM manufacturing PMI

Earnings calendar: Zscaler (ZS), Nebius Group (NBIS), NIO (NIO)

Here are some of the biggest stories you may have missed on Labor Day, overnight and early this morning:

Trump says India trade relationship is a 'disaster'

Why hedge funds are still cautious about buying US stocks

Bessent: Trump may declare a national housing emergency

Gold jumps above $3,500 to hit record high on rate-cut bets

Bessent sees Supreme Court backing Trump tariffs, readies Plan B

Tesla falls short with just 600 orders in India since launch

Tesla's China-made EV sales fall 4% August

Foreign buyers are driving Japan's record reflation-trade rally

Tesla sales soar in Turkey, becomes No. 2 brand in August

After becoming net sellers of US stocks in August, hedge funds remain hesitant about buying as September trading kicks off, Reuters reports.

The month has often been a downbeat one for markets. History looks set to repeat itself, even with a potential US interest-rate cut on the horizon.

Seasonal red flags, market fragility, a China buying spree, and a potential vicious circle of selling lie behind hedge funds' reluctance to join the recent rally, Wall Street sources say.

Reuters reports:

Direct US equities holders now possess the highest amount ever, relative to their income, UBS's markets and trading desk said in a note to clients on Thursday. ... These retail traders comprise just over 40% of the U.S. stock market.

This is a reason for caution because any signs of a sharp growth slowdown that prompts equity holders to reduce spending for speculative purposes might trigger a vicious circle of stock selling, noted Erlen Capital's Schneller.

\\"The retail bid is powerful but fragile — when multiples of disposable income are being funnelled into equities, it can extend the cycle, but it also raises the risk of a sharp unwind,\\" he said.

Read more here.

This week brings just four days of trading and a crucial nonfarm-payrolls report — the first since July's dramatic revisions and an abrupt change in BLS leadership surprised investors.

The August jobs report's importance for investors is downstream of its importance for the Federal Reserve, note Yahoo Finance's Jake Conley and Myles Udland.

They report:

In a key policy speech at Jackson Hole, Fed Chair Jerome Powell signaled that the central bank is likely to begin lowering interest rates at its policy meeting in September, pointing to a \\"curious\\" US labor market. ...

Questions over the health of the US labor market appear to have pushed Powell toward backing a rate cut from the central bank, a move that had already been supported by two of his colleagues on the FOMC — a contingent that is set to grow this week, too.

The Senate Banking Committee is scheduled to hold a nomination hearing on Thursday for Stephen Miran, Trump's nominee to replace Adriana Kugler, who stepped down from the Fed board on Aug. 8.

Should Miran get through the Senate as expected, yet another voice likely to support more aggressive rate cuts will be in the room when the Fed's next policy meeting kicks off on Sept. 16.

Whether Fed governor Lisa Cook will also be in attendance remains less clear.

Read more here.

Bloomberg reports:

Gold hit a record high as the prospect of Federal Reserve rate cuts and growing concerns over the central bank’s future gave fresh legs to the multiyear rally in precious metals.

Bullion for immediate delivery rose as much as 0.9% to $3,508.73 an ounce — surpassing the previous peak reached in April — before paring some gains during early trading in Asia on Tuesday. The precious metal has gained more than 30% this year, making it one of the best-performing major commodities.

The latest run has been fueled by expectations that the US central bank will lower interest rates this month, after Fed Chair Jerome Powell cautiously opened the door to a reduction. A key US jobs report this Friday is likely to add to signs of an increasingly subdued labor market — supporting the case for cuts. That’s boosted the allure of precious metals, which do not pay holders interest.

Read more here.