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Indexes down: Dow 0.73%, S&P 500 0.61%, Nasdaq 0.68%

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WNS rises after Capgemini announces $3.3 bln buyout

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Tesla slides on Musk's 'America Party' formation

(Updates with early afternoon prices)

By Pranav Kashyap and Nikhil Sharma

July 7 (Reuters) -

Wall Street kicked off the week on a dour note, with fresh

tariff uncertainty rattling investors, while Tesla shares

dropped after CEO Elon Musk announced his political party

ambitions.

Electric vehicle maker Tesla fell 7% to a near

one-month low and was on track for its worst day in over a

month.

Musk announced the formation of a U.S. political party named

the "American Party", marking a new escalation in his feud with

Trump.

"Tesla investors are starting to vote their displeasure

with him getting back into politics. The potential for him to

start his own American party is just the exact opposite of what

(they) want," said Art Hogan, chief market strategist at B Riley

Wealth.

Meanwhile, investors turned cautious as they awaited a

flurry of U.S. trade announcements expected within 48 hours,

with a key deadline to finalize new pacts looming.

President Donald Trump said on Sunday that the country

is on the cusp of several deals and would notify other countries

of higher tariff rates by July 9. He added that those duties are

set to take effect on August 1.

In April, Trump unveiled a base tariff rate of 10% on most

countries and additional duties ranging up to 50%. Subsequently,

he delayed the effective date for all but 10% until July 9. The

new date offers countries a three-week window for further

negotiations.

While the Nasdaq in April tumbled into bear market

territory on tariff fears, both the index and the S&P 500

had just closed at record highs on Thursday after a robust jobs

report.

The Dow was about 1% away from an all-time high.

Still, investors took to the sidelines, wary of shifting

trade policies.

Trump also threatened an extra 10% tariff on countries

aligning themselves with the "Anti-American policies" of the

BRICS group of Brazil, Russia, India, China and South Africa.

At 11:38 a.m. ET, the S&P 500 lost 0.61%, while the

Dow Jones Industrial Average fell 0.73% - with both the

indexes poised for their biggest single-day drop in three weeks.

The Nasdaq Composite lost 0.68%.

Ten of the eleven major S&P sectors were trading in the

red, with consumer discretionary falling the most by

1.1%.

Shares of WNS jumped 14.3% after the French IT

services firm Capgemini agreed to buy the outsourcing

firm for $3.3 billion in cash.

Trump's inflation-causing tariff policies have further

complicated the Fed's path to lower rates. As a result, minutes

of its June meeting, scheduled for release on Wednesday, should

offer more clues on the monetary policy outlook.

Traders have fully priced out a July rate cut, with

September odds at 64.4%, according to CME Group's FedWatch tool.

Attention is also on a sweeping tax-cut and spending bill,

passed by House Republicans after markets closed on Thursday,

that is set to swell the national deficit by over $3 trillion in

the next decade.

Declining issues outnumbered advancers by a 3.39-to-1

ratio on the NYSE, and by a 2.51-to-1 ratio on the Nasdaq.

The S&P 500 posted 24 new 52-week highs and three new

lows, while the Nasdaq Composite recorded 69 new highs and 32

new lows.