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Automakers, software companies cut losses on Mexico tariff

delay

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

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Indexes: Dow up 0.01%, S&P 500 down 0.36%, Nasdaq down

0.66%

(Updates as of mid-afternoon)

By Abigail Summerville and 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

three countries sparked a global scramble to safe-haven assets

earlier in the day.

Trump said he has paused planned 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.

Over the weekend, Trump had announced 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.

"Trump has been really serious that tariffs are going to be

a primary tool to achieve a number of different things," said

Carol Schleif, chief investment officer at BMO Family Office.

"They're not going away and the ride is likely to be bumpy

in the short run. And it's clear the European Union is in his

sights too."

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

likely to move further (down) and inflationary effects will

emerge."

At 2:19 p.m. EST (1919 GMT), the Dow Jones Industrial

Average rose 5.17 points, or 0.01%, to 44,549.83, the S&P

500 lost 21.37 points, or 0.36%, to 6,019.00 and the

Nasdaq Composite lost 129.66 points, or 0.66%, to

19,497.78.

Six of the 11 major S&P sectors rose, with defensive ones

such as healthcare and consumer staples

leading gains.

Legacy automakers - who have been roiled by the impending

tariffs - recouped some of their losses with Ford down

1.5% and General Motors ( GM ) down 3.1%.

The Cboe Volatility Index, known as Wall Street's

fear gauge, touched its highest level in a week before dropping

to a latest level of 18 points.

The stock market had already been pulling back last week

after Chinese startup DeepSeek unveiled a breakthrough in cheap

artificial intelligence models that sunk tech stocks. Nvidia ( NVDA )

fell 3.7%, while a gauge of semiconductor stocks

was down 1.5%.

"With the tariffs and the DeepSeek freak-out that you had

last week, you've got the shift going from the picks and shovels

of the technology buildout towards software. There's some of

that parsing going on with a focus on software," Schleif said.

The economically sensitive Russell 2000 smallcaps index

recovered from its three-week low, to trade down 1.3%.

Treasury yields edged down as investors fled to safer assets

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

high.

Meanwhile, several large companies report quarterly earnings

this week, with Tyson Foods ( TSN ) gaining 2.3% after the

meatpacker raised its annual sales forecast, while IDEXX

Laboratories ( IDXX ) added 12% 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 showed.

Declining issues outnumbered advancers by a 2.17-to-1 ratio

on the New York Stock Exchange, and by a 2.57-to-1 ratio on the

Nasdaq.

The S&P 500 posted 10 new 52-week highs and 20 new lows

while the Nasdaq Composite recorded 32 new highs and 202 new

lows.