Wall Street Indexes Pare Falls on prospects of Tariff Relief, as chip stocks Tumble

Wall Street’s main indexes rebounded from session lows on Thursday as a cabinet member signaled that the United States may soften its tariff policy. Still, chip stocks fell after investors were disappointed by Marvell’s estimate.

In an interview, Commerce Secretary Howard Lutnick stated that Donald Trump will likely extend the one-month tariff-free period on imports from Mexico and Canada to all items covered by a free trade agreement rather than just automotive products. However, concerns that the president would change his mind persisted when the United States trade imbalance reached a new high in January. Tariff-sensitive automakers General Motors and Ford fell approximately 1.1% each. Tesla’s stock plunged 4% after stockbroker Baird labeled it a ‘bearish fresh choice’. The ambiguity created by swiftly changing policy declarations can damage investment significantly if it harms the economy,” said Bill Sterling, global strategist at GW&K Investment Management.

“Also, investors are anxious about the amount of tariffs. This is well above what was seen in 2018 and may exacerbate inflation.” The benchmark S&P 500 has returned to levels achieved after Trump’s presidential triumph, while the Russell 2000 index has plummeted more than 7.5% since early November. The domestically oriented index dropped 0.6% on Thursday. Marvell plummeted 17.6% after forecasting first-quarter revenues in line with analysts’ average estimates, disappointing investors who expected higher AI-driven growth. Peers Broadcom and Nvidia also slumped, bringing the broader chip index <.SOX> down almost 3 percent. The S&P 500 technology sector fell 1.3%.

Concerns over overspending and overcapacity in the US AI business and China’s cheaper DeepSeek models halted Wall Street’s bullish trend in January. The tech-heavy Nasdaq is currently down approximately 8.8% from its December record high. On the statistics front, the number of Americans submitting new jobless claims declined more than expected last week. Friday’s vital payroll statistics will be critical for investors assessing the economy’s health.

According to statistics gathered by LSEG, traders now expect the Federal Reserve to decrease borrowing prices by 25 basis points for the first time this year in June. Philadelphia Fed President Patrick Harker stated that problems may be developing for an economy that is now in good health but displaying symptoms of stress in the consumer sector and dangers to the inflation forecast. Policymakers Raphael Bostic and Governor Christopher Waller will speak later in the day. Declining issues outpaced advancers by 1.9-to-1 on the NYSE and 1.66-to-1 on the Nasdaq. The S&P 500 had one new 52-week high and five new lows, while the Nasdaq Composite had 21 new highs and 99 new lows.