NEW YORK (Reuters) -Investors are bracing for more volatility after Wall Street's summer lull gave way when markets reopened from the Labor Day unofficial end-of-summer holiday on Tuesday.

With September historically the worst month for the U.S. stock market, fears over Federal Reserve independence and President Donald Trump's tariff uncertainty were at the fore, converging to jolt stocks and bonds.

Market participants have long fretted over frothy valuations in stocks and corporate bonds, even as signs of a slowing economy piled up this summer.

At the same time, an escalating spat between Trump and the Federal Reserve raised concerns that political strong-arming of the U.S. central bank could rattle the U.S. Treasury market, even as markets had appeared to take that in stride in recent weeks.

On Tuesday, those simmering anxieties boiled over, reignited by fresh doubts about the legality of Trump's tariffs that emerged over the holiday weekend. That pushed stocks and bonds down, with many in the market anticipating more turbulence ahead of a pivotal jobs report on Friday.

"We have some uncertainty around these tariffs, and that's the trigger right now I think for the risk-off sentiment," said Seth Hickle, portfolio manager at Mindset Wealth Management.

"The concern is that the bond vigilantes will awaken and cause some chaos in the bond market, given the fact that we may have to send some of this tariff money back overseas," he said, referring to bond investors who punish bad policy by selling government debt. 

The CBOE Market Volatility index touched its highest mark in over four weeks, while the S&P 500 stock index dropped 0.7% on Tuesday. Long-dated Treasury yields spiked amid a global bond selloff.

Benchmark 10-year Treasury yields, which rise when bond prices drop, surged by nearly five basis points to 4.269%, while 30-year yields surged to their highest since mid-July.

Rising yields can hurt stocks as bond returns become more attractive. Investors often look at 10-year yields of about 4.5% as a level at which demand for stocks wobbles.

They also tend to support the dollar, which staged a rebound from recent weakness on Tuesday. 

Mark Luschini, chief investment strategist at Janney Montgomery Scott, said the surge in 30-year Treasury yields to nearly 5% was "helping to put some pressure on the tape." 

The court ruling against Trump's tariffs "has obviously put a little consternation in terms of what it means for the collection of tariff revenues here in the U.S. and help toward paring back our budget deficit," Luschini said.

SEPTEMBER CHILLS

Seasonal weakness may stem in part from investors returning from summer holidays cleaning up portfolios while also making tax and other adjustments ahead of the end of the year.

Over the past 35 years, September has ranked as the worst-performing month of the year for the S&P 500, with an average decline of 0.8% during that period, according to the Stock Trader's Almanac. The index has fallen in 18 of those 35 Septembers, the only month to have been down more times than up in that period, according to the Almanac.

Christian Hoffmann, head of fixed income and portfolio manager at Thornburg Investment Management, said a risk-off move was largely expected this month, with heavy debt issuance in credit markets on Tuesday exacerbating the selloff in government debt as investors reallocated funds to corporate debt.

"Our bias has been to be lightening up on risk through the summer as valuations ground tighter," he said.

Corporate bond spreads -- the premium over U.S. Treasury yields that highly rated companies must pay to borrow -- hit their tightest-ever at 75 basis points last month, according to the ICE BofA Corporate Index.

"Given the lack of volatility that we've been seeing and where spread levels were, it seemed like the more likely case was to have some more volatility," Hoffmann said.

Friday's August jobs data will be crucial for investors to assess how aggressively the Fed will cut rates in the coming months, although continued inflation pressures could limit its ability to come to Wall Street's rescue.

Investors also will be watching this week's confirmation hearing for Stephen Miran, a close Trump ally and his pick for a temporary Fed post, replacing Adriana Kugler who resigned on August 1. His appointment comes as Trump escalates attacks on the Fed, including relentless criticism of Chair Jerome Powell for not lowering interest rates, and a push to remove Governor Lisa Cook.

"The market sees the possibility of a less independent central bank and there's going to be implications because of that," said Josh Chastant, portfolio manager for public markets at GuideStone Funds.

Investors also look for alternative assets that can help protect portfolios in volatile markets. Gold bullion rose to a record high near $3,540 an ounce on Tuesday.  

"This year, gold and bitcoin are both up, not one or the other," said Aakash Doshi, head of gold strategy at State Street Investment Management.

The two assets - one historically viewed as a hedge, the other as a high-volatility strategy - converge when it comes to the U.S. dollar, he noted. "Both offer an alternative to fiat currencies and de-dollarization."