Dow closes 600 points lower to begin September, S&P 500 drops 2%: Live updates

Stocks tumbled Tuesday as technology names struggled and new economic data rekindled fears around the health of the economy.

The Dow Jones Industrial Average fell 626.15 points, or 1.51%, to end at 40,936.93. The S&P 500 slid 2.12%, closing at 5,528.93. The Nasdaq Composite dropped 3.26% and settled at 17,136.30. All three indexes notched their worst days since the global sell-off on Aug. 5.

Chip stocks weighed on the market, with high-flying Nvidia dropping more than 9%. Micron, KLA and Advanced Micro Devices also saw declines in the session.

As a whole, the VanEck Semiconductor ETF (SMH) slid more than 7%. The S&P 500's information technology sector led the broad index lower and saw its worst day since September 2022.

The market initially took a leg down Tuesday morning after two readings of manufacturing production showed signs of weakness. S&P Global's showed a decline from July to August, while the Institute for Supply Management's came in under the level anticipated by economists polled by Dow Jones. This data reignited concerns around slowing growth within the U.S. economy, which helped drive a closely watched sell-off early last month.

"The market right now seems to be very jumpy to any data that comes in," said Larry Tentarelli, chief technical strategist at the Blue Chip Trend Report. "We've become a very data-dependent market."

Tuesday's moves kick off the new trading month after the three major averages finished August with gains. U.S. markets were closed Monday due to the Labor Day holiday.

But the momentum for stocks into September wasn't always expected. Concern over the U.S. economy falling into a recession, along with the unwinding of a popular hedge fund trade involving the Japanese yen, sent stocks tumbling