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Automakers, chip firms cut losses on Mexico tariff delay

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Wall Street's "fear gauge" falls back from one-week high

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Indexes down: Dow 0.34%, S&P 500 0.80%, Nasdaq 1.23%

(Updates prices with afternoon levels)

By Shashwat Chauhan

Feb 3 (Reuters) - Wall Street's main indexes pared

losses on Monday, as U.S. President Donald Trump delayed new

tariffs on Mexico after his orders to levy steep tariffs on key

trading partners sparked a global scramble to safe-haven assets

earlier in the session.

Trump said on Monday he has paused new tariffs on Mexico for

one month after the nation agreed to reinforce its northern

border with 10,000 National Guard members to stem the flow of

illegal drugs, particularly fentanyl.

Talking about the negotiations with Mexico, Steve Sosnick,

chief market analyst at Interactive Brokers, said this "raises

the possibility that there's some negotiating room with either

Canada, China or both."

"Its much more encouraging to the markets (that) there's

this pause and that is exactly why the market shot higher."

However, the New York Times cited a senior Canadian

government official saying that Canada is not optimistic about

getting a similar reprieve.

Over the weekend, Trump had imposed hefty new tariffs of 25%

on imports from Mexico and Canada, and 10% on China - which he

said may cause "short-term" pain for Americans.

Analysts at Citi noted that "if tariffs persist, markets are

likely to move further (down) and inflationary effects will

emerge."

At 11:58 a.m. ET, the Dow Jones Industrial Average

fell 151.08 points, or 0.34%, to 44,393.58, the S&P 500

lost 48.59 points, or 0.80%, to 5,991.94 and the Nasdaq

Composite lost 241.23 points, or 1.23%, to 19,386.11.

Six of the 11 major S&P sectors turned higher, with

defensive ones such as health care and consumer staples

leading gains.

Other megacap and growth stocks were also off lows, with

Nvidia ( NVDA ) now down 3.3%, while a gauge of semiconductor

stocks was now only down 1.5%.

Legacy automakers - who have been roiled by the impending

tariffs - also recouped most of their losses with both Ford

and General Motors ( GM ) down over 1% each.

The economically sensitive Russell 2000 smallcaps index

recovered from its three-week low, now down 1.1%.

Treasury yields edged down as investors fled to safer assets

such as bonds and gold. Spot gold scaled an all-time

high.

The Cboe Volatility Index, known as Wall Street's

"fear gauge", dropped back from its highest level in a week,

last at 17.72 points.

The quarterly earnings, meanwhile, remained in full swing,

with Tyson Foods ( TSN ) gaining 1.7% after the meat packer

raised its annual sales forecast, while IDEXX Laboratories ( IDXX )

added 11% after the animal diagnostics maker beat

fourth-quarter profit and revenue estimates.

On the data front, U.S. manufacturing grew for the first

time in more than two years in January, data from the Institute

for Supply Management (ISM) showed.

Declining issues outnumbered advancers by a 2.04-to-1 ratio

on the NYSE, and by a 2.54-to-1 ratio on the Nasdaq.

The S&P 500 posted nine new 52-week highs and 20 new lows,

while the Nasdaq Composite recorded 29 new highs and 187 new

lows.