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Indexes down: Dow 1.17%, S&P 500 1.46%, Nasdaq 1.84%

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PepsiCo ( PEP ) gains after Elliott discloses $4 bln stake

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Gold miners gain as bullion prices hit record high

(Updates with afternoon levels)

By Purvi Agarwal and Ragini Mathur

Sept 2 (Reuters) -

Wall Street's main indexes tumbled to a more than one-week

low on Tuesday, as investors returning from a long holiday

weekend confronted fresh uncertainty over the legality of

President Donald Trump's tariffs.

A divided U.S. appeals court ruled on Friday that most of

Trump's tariffs are illegal, but allowed for the levies to be in

place until October 14. The Trump administration can still file

an appeal with the Supreme Court.

Yields on longer-dated U.S. Treasuries rose on Tuesday, with

ones on the 30-year notes at their highest levels in

more than a month, pressuring equities.

The CBOE Market Volatility index also touched its

highest mark in over four weeks and was last up 3.2 points at

19.3.

"With less tax revenue coming in, they're (the U.S.) going

to have a higher financing rate because they have to pay bills

and they're losing a source of income," said Michael Matousek,

head trader at U.S. Global Investors, highlighting potential

fiscal concerns if the ruling is upheld.

At 12:00 p.m. ET, the Dow Jones Industrial Average

fell 533.57 points, or 1.17%, to 45,010.81, the S&P 500

lost 94.73 points, or 1.46%, to 6,365.73 and the Nasdaq

Composite lost 395.27 points, or 1.84%, to 21,060.28.

Most S&P 500 sectors traded in the red, with tech stocks

the biggest drags. Nvidia ( NVDA ) fell 3.8%, Apple ( AAPL )

lost 2%, while Microsoft ( MSFT ) was off 1.2%.

Conversely, a 2.6% gain in PepsiCo ( PEP ) after Elliott

Management disclosed a $4 billion stake in the beverages giant,

launching an activist campaign, kept consumer staples stocks

afloat.

Meanwhile, caution prevailed ahead of the August nonfarm

payrolls report, due on Friday, which will follow a monthly

private payrolls reading and job openings figures.

Markets are pricing in about a 91.2% chance of a

25-basis-point cut in interest rates at the Fed's meeting later

this month, according to the CME Group's FedWatch tool.

Investors' dovish tilt came after July's weak job report,

with Fed Chair Jerome Powell acknowledging the growing risks to

the labor market at the Jackson Hole symposium, helping the S&P

500 and the Dow log their fourth consecutive month of gains in

August.

The Nasdaq logged its fifth straight monthly gain last

month.

"If you see indications that the economy is coming along and

unemployment is dropping, that's a good sign... (Powell) might

hold off on rates so he doesn't try to overheat the economy,"

said Matousek.

Markets are also entering seasonally dour September, which,

according to DataTrek Research, is the only month since 1958

where the S&P 500's mean returns are negative.

An announcement from Trump related to the U.S. defense

department later in the day will also be watched.

In stocks, gold miners gained after bullion prices hit a

record high. U.S.-listed shares of Harmony Gold rose

7.3%, Barrick Mining gained 1.5% and Newmont ( NEM ) added

1.9%.

Kraft Heinz ( KHC ) fell 6.4%. The packaged goods giant will

split into two listed companies.

Declining issues outnumbered advancers by a 3.61-to-1

ratio on the NYSE and by a 2.79-to-1 ratio on the Nasdaq.

The S&P 500 posted seven new 52-week highs and four new

lows, while the Nasdaq Composite recorded 71 new highs and 75

new lows.