*

Tesla drops after bearish brokerage view, report says

*

Kroger ( KR ) rises on upbeat annual sales forecast

*

Weekly jobless claims stand at 221,000

*

Indexes off: Dow -1.35%, S&P 500 -2.15%, Nasdaq -2.99%

(Updates to 2:34 PM ET)

By Johann M Cherian, Sukriti Gupta and Chibuike Oguh

March 6 (Reuters) - Wall Street stocks were lower on

Thursday, with the Nasdaq on track for a correction, weighed

down by market jitters over the current uncertainty surrounding

U.S. trade policy.

President Donald Trump announced on Thursday that goods

from Mexico covered by the U.S.-Mexico-Canada trade agreement

(USMCA) will be exempted for a month from the 25% tariffs

imposed earlier this week. The development comes a day after

Trump exempted automotive goods from the tariffs.

Trump, however, made no mention of a parallel suspension

for Canada, despite U.S. Commerce Secretary Howard Lutnick

earlier saying there would be a reprieve for all imports under

the USMCA trade pact.

"The fog of confusion is getting thicker by the moment

unfortunately," said Mark Malek, chief investment officer at

SiebertNXT in New York.

"We are getting a lot of just different conflicting

information: tariffs are on, tariffs are off, some tariffs are

off and so forth."

All 11 sectors on the benchmark S&P 500 index were

trading lower on the session, with the biggest losses in

consumer discretionary, real estate and

technology equities.

The Nasdaq was set to drop 10% from its December 16 closing

level, marking a correction.

At 02:34 p.m., the Dow Jones Industrial Average

fell 581.74 points, or 1.35%, to 42,424.85, the S&P 500

lost 125.66 points, or 2.15%, to 5,716.97 and the Nasdaq

Composite lost 554.77 points, or 2.99%, to 17,997.32.

"The uncertainty created by rapidly shifting policy

pronouncements can damage investment in particular and hurt the

economy," said Bill Sterling, global strategist at GW&K

Investment Management.

"The other thing that investors are concerned about is

the size of the tariffs. This is way beyond what was experienced

in 2018 and could raise inflation."

Automaker General Motors ( GM ) was down 2.3% while its

counterpart Ford was 0.7% lower. Tesla fell 6.2%

with brokerage Baird naming the electric carmaker a "bearish

fresh pick".

Marvell ( MRVL ) fell 19% after the chipmaker's results

failed to impress investors. Other semiconductor makers were

lower, including Broadcom ( AVGO ) and Nvidia ( NVDA ), pulling

the broader chip index down over 4.3%.

Kroger ( KR ) rose 2% after forecasting annual same-store

sales largely above estimates.

"With the constant barrage of geopolitical news - the

tariffs on and then off again - confidence is getting a little

bit leaky and it's not surprising sentiment is not great," said

Jack Janasiewicz, portfolio manager at Natixis Investment

Managers Solutions in Boston.

"We are also starting to see economic data slow at the

margin. You put all these things together and it's not

surprising you're starting to see chips come off the table."

Data shows that the number of Americans filing new

applications for unemployment benefits fell more than expected

last week. Investors will be eyeing Friday's more comprehensive

payrolls data.

Traders now see the Federal Reserve lowering borrowing costs

by 25 basis points for the first time this year in June,

according to data compiled by LSEG.

Philadelphia Fed President Patrick Harker said that trouble

may be brewing for an economy that is currently in good shape

but showing signs of stress in the consumer sector and risks to

the inflation outlook.

Declining issues outnumbered advancers by a 3.45-to-1 ratio

on the New York Stock Exchange. There were 66 new highs and 111

new lows on the NYSE.

The S&P 500 posted one new 52-week high and seven new lows

while the Nasdaq Composite recorded 24 new highs and 128 new

lows.