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 .SPLRCD, real estate .SPLRCR and technology .SPLRCT 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 .DJI fell 581.74 points, or 1.35%, to 42,424.85, the S&P 500 .SPX lost 125.66 points, or 2.15%, to 5,716.97 and the Nasdaq Composite .IXIC 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.N was down 2.3% while its counterpart Ford F.N was 0.7% lower. Tesla TSLA.O fell 6.2% with brokerage Baird naming the electric carmaker a "bearish fresh pick".

Marvell MRVL.O fell 19% after the chipmaker's results failed to impress investors. Other semiconductor makers were lower, including Broadcom AVGO.O and Nvidia NVDA.O, pulling the broader chip index .SOX down over 4.3%.

Kroger KR.N 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.

(Reporting by Johann M Cherian and Sukriti Gupta in Bengaluru and Chibuike Oguh in New York; Editing by Maju Samuel and Nia Williams)

((johann.mcherian@thomsonreuters.com;))