Stocks often fall like leaves in autumn but there are other reasons keeping investors on edge as we head into September. Several major risks are set to culminate in the short term.

Legal battles over tariffs and the Federal Reserve are the biggest issues. After a federal appeals court ruled most of President Donald Trump's tariffs are illegal, the White House has until Oct. 14 to file an appeal to the Supreme Court. While backup plans are in place should the administration lose, it would mean more upheaval for companies adapting their supply chains for import levies.

It could be a busy time for the supreme justices, who are also likely to eventually rule on the attempted firing of Fed Gov. Lisa Cook. Even if the market is confident in a quarter-point cut to interest rates this month, concerns about whether the central bank will retain its independence are part of the reason gold futures are hitting record highs -- a sign uncertainty is mounting.

Gold's safe-haven appeal only seems to be getting stronger as markets price in the possibility of a Fed dominated by Trump appointees eager to cut rates, therefore weakening the dollar. This week's jobs report on Friday bears watching, with the unemployment rate forecast to hit a nearly four-year high. The August numbers also represent the first monthly update since the head of the Bureau of Labor Statistics was fired in another test of agency independence.

That all feels like a set up for a classic September disappointment -- statistically the weakest month for returns from the S&P 500 over the past 75 years -- although momentum from the summer rally might indicate differently. A change of seasons might be coming for the stock market, too.

-- Adam Clark

***

As Trump Battles Fed, Investors Await August Jobs Report

Amid the Trump administration's legal battle to remove Federal Reserve Gov. Lisa Cook, markets will also be looking ahead to a big week of labor data, culminating in Friday's jobs report for August. The much-anticipated numbers could all but make an interest-rate cut official at the Fed's September meeting.

   -- Fed Chair Jerome Powell has called the current labor market "curious," 
      with low job growth and muted layoffs combining to keep the unemployment 
      rate near historic lows. This week's Job Openings and Labor Turnover 
      Survey is expected to show 7.34 million job openings as of July's end. 
 
   -- The Fed's periodic survey of district bank economic conditions, called 
      the Beige Book, could provide some context as the Fed heads into its 
      meeting this month. A survey from earlier this summer showed hiring 
      trends were slow and cautious given economic uncertainty. 
 
   -- Private payroll numbers from ADP are expected to show a 83,000 increase 
      in private-sector employment for August, which would be 21,000 fewer than 
      in July. Also this week, the Institute for Supply Management's services 
      PMI report for August is expected to be 50.9, slightly higher than July. 
 
   -- Powell's speech at the Jackson Hole symposium in August tilted the Fed's 
      concerns toward a weakening labor market as opposed to accelerating 
      inflation. Futures markets see an 86% probability of a quarter-point rate 
      cut. 

What's Next: Economists forecast a 75,000 increase in nonfarm payrolls for August, only slightly higher than July's gain. The unemployment rate is expected to tick up to 4.3%, from 4.2%.

-- Dan Lam and Liz Moyer

***

Dissent in Court's Tariff Ruling Could Be Road Map to Success

White House trade advisor Peter Navarro said the dissent in Friday's federal appeals court ruling that called the administration's broad tariffs illegal could provide a road map for a successful Supreme Court challenge by the Trump administration.

   -- The appeals court ruled 7-4 that the so-called reciprocal tariffs, which 
      the administration imposed using emergency powers, weren't valid but 
      allowed them to stand through Oct. 14 pending appeal. The dissent 
      provided a "very clear road map to how the Supreme Court can certainly 
      rule in our favor," Navarro said. 
 
   -- Navarro pointed to Americans dying from fentanyl and a trade deficit with 
      other nations as proof enough that there is a national emergency. And he 
      disputed the court majority's opinion that the tariffs are permanent. 
      "Memo to the court: We never said they were permanent," he told Fox's 
      Sunday Morning Futures. 
 
   -- Oklahoma Republican Sen. James Lankford said off again, on again tariff 
      policies are destabilizing for businesses. Companies "just want it to be 
      set,' he told NBC's Meet the Press. He urged a quick resolution so 
      businesses can know the rules of the road. 
 
   -- The U.S. government brought in $28 billion from tariffs in July. 
      Investors have been banking on this steady stream of revenue to keep 
      coming in; the money could help reduce the budget deficit of $1.6 
      trillion. Disruption to tariff payments could have a negative impact on 
      bond yields. 

What's Next: Congress returns to Capitol Hill this week with another priority on the horizon: government funding after Sept. 30. Republican lawmakers face this annual fight after earlier passing President Trump's tax and spending bill without any Democrats. But they likely will need some cooperation to pass a funding extension.

-- Liz Moyer and Paul R. La Monica

***

September Usually Underwhelms. The Case for This Time Being Different.

The stock market has a track record of under-delivering in September, but the summer's rally could put the major indexes on track to break that trend. Beyond that, stocks could be choppy, with the S&P 500 expected to finish 2025 only modestly above current levels.

   -- The S&P 500 has posted an average drop of around 0.7% in September over 
      the past 75 years, versus an average gain of 0.6% in the other months. 
      Stocks rose 1.9% in August, and the S&P 500 reclaimed its all-time high. 
 
   -- Adam Turnquist, chief technical strategist at LPL Financial, sees a 
      positive sign. S&P 500 has been trading above its 200-day moving average 
      for three months. Typically the index rises twice its normal average when 
      it's trading above that line heading into September. "The trend is your 
      friend." 
 
   -- Mark Luschini, chief investment strategist at Janney Management, believes 
      the S&P 500 could hit 6600 in the near term, up 2% from current levels. 
      But he and other analysts said the booming tech sector could give way to 
      smaller and non-tech stocks. 
 
   -- Relative low market volatility could be a caveat. The Cboe Volatility 
      Index is down more than 73% from its April peak this year, while the S&P 
      500 advanced 30%. A return of volatility could make stock performance 
      choppy, and the VIX tends to rise in the fall, Turnquist says. 

What's Next: September's embedded headline risks include Friday's jobs report for August, revisions to prior estimates on Sept. 9, and the August inflation report on Sept. 11, expected to reflect President Donald Trump's latest tariffs. The Fed makes its interest-rate decision on Sept. 17.

-- Martin Baccardax, Paul R. La Monica, and Janet H. Cho

***

Nestlé Dismisses CEO for Relationship With Colleague

Swiss food giant Nestlé abruptly fired its relatively new CEO Laurent Freixe, just a year into his role, for a secret romance with a subordinate, the company said Monday. The change comes at a challenging time for the KitKat and Toblerone maker, which is suffering lower-than-expected growth and is selling some non-core businesses.

   -- Freixe will be succeeded by Philipp Navratil, a 24-year Nestlé 
      veteran who most recently was chief executive of the coffee business 
      Nestlé Nespresso. Freixe had succeeded Mark Schneider with a remit 
      to jump-start sluggish sales. 
 
   -- The CEO's dismissal follows an investigation that found he had "an 
      undisclosed romantic relationship with a direct subordinate" that 
      breached Nestlé's code of business conduct. "This was a necessary 
      decision," said board Chairman Paul Bulcke. "Nestlé's values and 
      governance are strong foundations of our company. I thank Laurent for his 
      years of service." 
 
   -- Navratil joined Nestlé in 2001 as an internal auditor. Over the 
      years, he has served as country manager for Nestlé Honduras; led the 
      coffee and beverage business in Mexico; and shaped global strategy for 
      Nescafé and Starbucks coffee brands as a leader in Nestlé's 
      Coffee Strategic Business Unit. 

What's Next: There will likely be the usual short-term turmoil that comes with a change in senior leadership, but Navratil will likely stick with the new strategy. It is addressing the underperforming businesses, said HSBC analyst Jeremy Fialko in a Tuesday note, pushing the bigger innovations faster, and reducing costs. He said: "Following the material de-rating in recent months, we think Nestlé offers excellent value."

-- Barron's Staff

***

Sports Betting Heats Up with NFL Season Kickoff This Week

Thursday's matchup between the suddenly Micah Parsons-less Dallas Cowboys and the defending Super Bowl champion Philadelphia Eagles kicks off the National Football League season. It also ushers in a lucrative new season for the two largest sports betting companies: DraftKings and FanDuel's owner, Flutter Entertainment.

   -- The American Gaming Association estimates that $30 billion will be 
      wagered legally on pro football games this year, up more than 8.5% from 
      last season's $27.6 billion. DraftKings and FanDuel dominate the legal 
      U.S. sports betting market, ahead of rivals BetMGM, Fanatics, and ESPN 
      Bet. 
 
   -- Flutter's shares have soared 18.9% so far this year, while DraftKings 
      shares are up 29%. DraftKings' stock has gained 7% since it reported 
      record second-quarter revenue and earnings on Aug. 6. DraftKings 
      maintained its full-year revenue guidance for $6.2 billion to $6.4 
      billion. 
 
   -- Flutter on Aug. 7 posted better-than-expected second-quarter revenue and 
      adjusted earnings. CEO Peter Jackson said it is considering a move into 
      prediction markets, where people bet on the outcome of future events. 
      "We're continuing to watch the space very closely." 
 
   -- The NFL isn't the only game potentially boosting gambling companies. 
      College football season has just begun, and Major League Baseball 
      playoffs and the tipoff of the National Basketball Association season are 
      also around the corner this fall. 

What's Next: Earnings growth is expected to be solid for both DraftKings and FanDuel. Analysts forecast more than 25% average annual earnings gains for DraftKings over the next few years, and long-term profit growth in excess of 30% annually for Flutter.

-- Paul R. La Monica and Janet H. Cho

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 02, 2025 07:08 ET (11:08 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.