US equity indexes slumped Thursday, failing to immediately respond to Commerce Secretary Howard Lutnick's jawboning amid a perceived capital flight into Europe and Asia.

The Nasdaq Composite slumped 2.4% to 18,106.1, the S&P 500 slid 1.8% to 5,735.4, and the Dow Jones Industrial Average was 1.1% lower at 42,511.3. Real estate, consumer discretionary, and technology led the steepest decliners, with all sectors down intraday.

President Donald Trump could defer 25% tariffs on Canada and Mexico for all goods and services covered by the USMCA regional trade agreement, a Bloomberg report said Thursday, citing Lutnick. Trump will decide imminently on the scope of a one-month exemption on 25% tariffs imposed this month, the commerce secretary said in a CNBC interview. "I think it's likely it will cover all USMCA-compliant goods and services."

The exemption will stay until April 2, when Trump plans to enact a fresh round of tariffs, including "reciprocal" import duties on countries globally and sectors such as automobiles, pharmaceuticals, and semiconductors, the Bloomberg report said.

Most US Treasury yields rose intraday, with the 10-year up 2.9 basis points to 4.3% intraday.

Meanwhile, the German 10-year yield touched a 52-week high Thursday after reportedly surging the most in a day on Wednesday since the country's unification 35 years ago as the government announced a defense and infrastructure program. There's no doubt that markets are pricing in a once-in-a-generation policy regime shift, which has brought about a "huge risk-on move for European assets," a Deutsche Bank note said.

"US isolationism is driving European debt issuance plans skyward to foot the bill for being on its own," Derek Holt, head of capital markets economics at Scotiabank, said in a note. "The impact on equities continues to be one of capital flight from US equities into European and Asian benchmarks that has been going throughout this year so far."

The CBOE's volatility index VIX, known as the fear gauge, surged 11% to 24.28.

In economic news, layoff plans in the US increased to 172,017 jobs in February, the highest monthly total since July 2020, driven by government sector cuts, outplacement firm Challenger, Gray & Christmas said.

US initial jobless claims fell to 221,000 in the week ended March 1 from 242,000, compared with expectations for a drop to 233,000 in a survey of analysts compiled by Bloomberg.

The January trade deficit swelled to a record $131.4 billion in the US, up from $98.1 billion a month ago and ahead of the FactSet consensus estimate for a $96.6 billion gap as imports soared 10%.

In company news, MongoDB (MDB) shares sank 24% intraday, the steepest decliner on the Nasdaq, after the company's fiscal 2026 outlook missed the analysts' estimates.

Marvell Technology's (MRVL) shares slumped over 18% intraday, the second-worst performer on the Nasdaq. Marvell's positive risk/reward outlook represents a buying opportunity, given the share price drop after its fiscal Q4 results, Deutsche Bank said in a note.

West Texas Intermediate crude oil futures declined 0.8% to $65.79 a barrel.

Gold futures were steady at $2,925.31, while their silver counterparts rose 0.6% to $33.34.