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 in early August. At one point, the S&P 500 was down more than 7% for the month before its recovery.

This action comes ahead of the first major economic release of the month on Friday, when the U.S. government releases the August jobs report. Wall Street will also have to contend with seasonal headwinds, as September has been the worst month on average for the S&P 500 over the last 10 years.

Stocks close lower

The three major averages finished Tuesday's session down.

The Dow and S&P 500 closed 1.5% and 2.1% lower, respectively. The Nasdaq Composite slid 3.3%.

— Alex Harring

Back-to-school shopping likely better than some have feared

As the back-to-school shopping season grinds to an end, TD Cowen predicts spending will rise 1% to 3%, which is on the high-end of the industry-wide predictions that range from a decline of 7% to an increase of 3%.

The firm's analysts see a cautious consumer who is focusing spending on things they absolutely need over impulse purchases of things they simply want. That said, shoppers still have a desire to spend. Heading into the fall, Cowen is concerned that the U.S. election could lead to volatile spending patterns and expects weather could be a headwind.

With this in mind Walmart and Revolve group are among two of its top retail picks. Walmart, which hit an all-time high in trading Tuesday, has been picking up market share across income groups, it said. Shares are up nearly 48% year to date.

Revolve, an apparel retailer that caters to millennials and Gen Z customers, has seen its stock rise 36% year to date. Although it went public in 2019, it only opened its first permanent brick-and-mortar store earlier this year.

"We see opportunity for further growth through expansion into new and underpenetrated categories, extension of private label merchandise (~20% of sales now versus peak of 36%), and investment into physical retail," the analysts wrote in a research note.

—Christina Cheddar Berk

Demand for non-tech sectors is still low, Strategas says

The worry that the market has become too concentrated in just handful of tech stocks has been persistent throughout 2024, but investors have shown little appetite to rotate away from those winners.

Strategas ETF strategist Todd Sohn said in a note to clients that sector funds outside of tech continue to see little demand, even after the tech rally saw some stumbles over the summer.

"The 10 largest names have contributing 59% of YTD gains (and 68% last year) as flows remain 'all-in' on Tech. The risk for investors? Missing accelerations from ignored corners of the equity market that have spent the last +2 years in bear markets. All 'non-Tech' sector flows are negative over the trailing 12-months," the note said.

— Jesse Pound

Stocks trade near session lows into final hour

Stocks continued sliding as the market geared up for the last hour of Tuesday trading.

The Dow and S&P 500 lost about 1.5% and 2%, respectively. The Nasdaq Composite slid 3.1%, on track for its worst day since early August. All three sat near session lows shortly before 3 p.m. ET.

— Alex Harring

Piper Sandler remains optimistic into September

Despite seasonally weak trends for stocks, Piper Sandler said it's staying bullish into the new month.

Analyst Craig Johnson told clients on Tuesday that improving market breadth, particularly with expanding participation of small and mid-cap stocks in the rally, bodes well for stocks in September. The outlook for lower interest rates is also reason for optimism, he said.

To be sure, Johnson noted that September has been a weak month historically. But he noted that performance is usually "somewhat stronger" in presidential election years with a Democratic incumbent.

Johnson said he expects the S&P 500 to finish the year at 5,800, which reflects upside of 2.7% over Friday's close.

— Alex Harring

Tom Lee turns cautious, sees 7%-10% pullback

Equity strategist Tom Lee expects the stock market will run into some turbulence over the next eight weeks, anticipating a pullback of 7% to 10%.

"I think investors should be cautious for the next eight weeks," Lee told CNBC's "Squawk Box" on Tuesday. "Market's been up seven of the eight months this year. So we know it's an incredibly strong market. But we also have the September cuts, and we have the election, things that will get people nervous."

CNBC Pro subscribers can read the full story here.

— Sarah Min

SPY trading volumes are sluggish to start August

Some of the Wall Street trading desks may have missed the memo that summer is supposed to be over.

With midday now past, the trading volume on the SPDR S&P 500 Trust (SPY) is at about 23 million shares, according to FactSet. That means that the widely used trading instrument could end the day with lower volume than its August daily average of 56.6 million shares.

The low volumes also mean that the early slide for stocks on Tuesday could prove to be a hiccup that mellows out once more trades are made. Alternatively, an extended decline could bring more traders back to their desks to deal with the move.

— Jesse Pound

U.S. crude oil erases gains for 2024, Brent hits lowest level since 2023

Oil prices fell more than 3% on Tuesday, with U.S. crude erasing all gains for the year while global benchmark Brent hit the lowest level since December 2023.

U.S. crude was last trading at $70.76 per barrel, while Brent had fallen to $74.29 per barrel.

The prospect of OPEC+ increasing output in October and slowing manufacturing activity in China are weighing on the market, overshadowing major production disruptions in Libya.

— Spencer Kimball

Boeing shares headed for worst day in nearly 2 years

Boeing shares sold off more than 8%, dragging the Dow Industrials lower, after a Wells Fargo downgrade to underweight from equal weight.

"We think BA had a generational [free cash flow] opportunity this decade, driven by ramping production on mature aircraft and low investment need," wrote analyst Matthew Akers. "But after extensive delays and added cost, we now see growing production cash flow running into a new aircraft investment cycle, capping FCF a few years out."

Tuesday's slide put Boeing on track for its biggest one-day loss since Oct. 26, 2022.

— Fred Imbert

Stocks making the biggest moves midday

Here are the stocks on the move midday:

Cleanspark – The crypto miner's stock plunged more than 13%. Cleanspark released its mining update for August, which showed that it mined 478 bitcoins last month. That marks a drop from 494 in July and 659 in August last year.

Vaxcyte – Shares were recently up about 36% and earlier hit a record high after the vaccine company reported positive results from the Phase 1/2 study for its 31-valent pneumococcal conjugate vaccine candidate. The drug is meant to prevent invasive pneumococcal disease in adults aged 50 and older. Leerink Partners said he results were "stunning" and expect the vaccine candidate's profile is a "category killer."

Unity Software – Shares of the video game maker jumped about 6% after Morgan Stanley upgraded the stock to overweight from equal weight, saying shares of the company are now derisked and pointing to Unity's position as "the clear game engine."

Read the full list here.

— Sean Conlon

Nvidia leads chip stocks lower

Nvidia shares were down 5% in early trading, leading the broader semiconductor sector lower.

The VanEck Semiconductor ETF (SMH) shed 3.9%, putting it on pace for its biggest one-day loss since Aug. 2. Intel also struggled, losing more than 5%. KLA, Micron Technology and Teradyne shed more than 4% each.

— Fred Imbert

Consumer staples, utilities outperform

Consumer staples and utilities were the two leading sectors in the S&P 500 on Tuesday, indicative of the defensive tilt in markets after the latest economic data revived growth fears.

Consumer staples was higher by 0.6% during the 10 o'clock hour. Shares of J.M. Smucker advanced 3%, while Campbell Soup rose more than 2%.

Utilities stocks eked out a 0.1% gain. Southern Company and Duke Energy had gained by more than 1%, each.

— Sarah Min

September usually kicks off with a loss

The first trading day of September has been a tough one for stocks in recent history, according to data from Bespoke Investment Group.

The firm found that the S&P 500 has shed 0.14% in the median trading day after Labor Day when looking at the last two decades.

On top of that, the last time that the first session of the month was positive for the broad index was 2017.

September as a whole has been a hard month for stocks over the past several years, data shows. Notably, FactSet found the S&P 500 has lost more than 2% in an average September over the last decade.

— Alex Harring

ISM manufacturing measure shows activity disappointed in August

Activity in U.S. factories was slower than expected in August, the Institute for Supply Management reported Tuesday.

The ISM manufacturing index came in at 47.2% for the month, up 0.4 percentage points from the July reading but below the Dow Jones consensus forecast for 47.9%. The gauge measures the percentage of companies reporting expansion, so anything below 50% represents contraction.

Elsewhere in the survey, the employment index moved up slightly but was still in pullback territory at 46%, while measures for new orders and supplier deliveries both fell and inventories moved higher. On the inflation front, the prices index edged higher to 54%.

—Jeff Cox

Stocks open lower

The three major averages kicked off Tuesday's session in the red.

The Dow slipped about 0.4% shortly after 9:30 a.m. ET. The S&P 500 and Nasdaq Composite dropped 0.7% and 0.9%, respectively.

— Alex Harring

Warren Buffett resumes selling Bank of America shares

Warren Buffett's Berkshire Hathaway resumed selling its big Bank of America holding last week, dumping $6 billion worth of the bank shares in a string of stock sale that began mid- July.

The Omaha-based conglomerate sold 21.1 million shares on Wednesday, Thursday, and Friday generated $848.2 million, which is an average price of $40.24, according to a new filing Friday, when Buffett turned 94 years old.

Berkshire has sold Bank of America shares for six straight sessions. Since it began to reduce its holding on July 17, it has sold shares during 21 of the past 33 sessions.

BofA is Berkshire's third largest equity holding, accounting for around 11% of its portfolio. Berkshire remains Bank of America's largest shareholder with a 11.4% stake of 882.7 million shares valued at nearly $36 billion.

— Yun Li

Stocks making the biggest moves before the bell: United States Steel, Unity Software and more

These are the stocks moving the most in premarket trading:

• United States Steel — The industrial stock plunged 6% after Vice President Kamala Harris opposed the planned sale of United States Steel to Japan's Nippon Steel.
• Unity Software — The video game maker rallied 6% after Morgan Stanley upgraded the stock to overweight from equal weight.
• Boeing — Shares slipped 3% after Wells Fargo downgraded the aircraft maker to underweight from equal weight.

Read the full list of stocks moving here.

— Lisa Kailai Han

Stocks come off winning month

Tuesday marks the first session of September's trading month. Stocks have some momentum, with the three major averages coming off a winning August.

The S&P 500 jumped 2.3%, notching its fourth straight positive month. The Dow and Nasdaq Composite added 1.8% and 0.7%, respectively.

— Alex Harring

Stock market returns will likely be minimal, Morgan Stanley says

Morgan Stanley strategist Michael Wilson doesn't expect the S&P 500 to make much headway in the months ahead.

"Unless the Fed cuts more than the market is already expecting, the economy strengthens, and/or additional forms of policy stimulus are introduced, equity investors should expect minimal returns at the index level over the next 6-12 months and should remain up the quality curve," Wilson wrote.

— Fred Imbert

Short week, but key data reports ahead

Here's a look at the key U.S. economic reports slated for release this week:

• Tuesday: ISM manufacturing index for August
• Wednesday: July durable goods orders, Fed Beige Book
• Thursday: ADP payrolls report for August
• Friday: August U.S. jobs report

— Fred Imbert

September not a good month for stocks

Hold on. The new month could bring pressure to the stock market, if history is any indication.

Over the last 10 years, the S&P 500 has lost an average of 2.3% in September, according to data from FactSet. That makes it the worst month for the broad market index over that time period. On top of that, the S&P 500 has posted a loss in each of the last four Septembers — including a 9.3% plunge in 2022.

— Fred Imbert

Stock futures open little changed

Stock futures kicked off Monday night trading little changed.

Dow futures slipped 15 points. S&P 500 futures rose 0.1%, while Nasdaq-100 futures 0.2%.

— Fred Imbert