US STOCKS-Wall St edges higher after services sector data; tariffs in focus

By Johann M Cherian and Sukriti Gupta

March 5 (Reuters) - Wall Street's main indexes edged up on Wednesday, after better-than-expected services data allayed worries of a slowdown in the U.S. economy, while investors awaited a potential softer approach from President Donald Trump on trade policy.

An ISM survey showed the services sector activity, which makes up a large part of the economy, stood in the expansion territory at 53.5, higher than expectations of 52.6. But a spike in the price of services inputs tempered optimism.

Investors are also closely monitoring the latest developments on tariffs. Commerce Secretary Howard Lutnick said in an interview that Trump was considering granting some relief on import of items such as cars and autoparts, that comply with the U.S.-Mexico-Canada free-trade agreement.

The remarks came after Trump escalated a global trade war on Tuesday as he imposed 25% tariffs on top trade partners, Canada and Mexico, citing ineffective border controls.

The tariff announcement is expected later in the day.

Carmakers Ford F.N rose 3.2%, General Motors GM.N added 4.8% and Tesla TSLA.O gained 1.8%, after logging sharp declines in the previous session.

Brent Schutte, chief investment officer of Northwestern Mutual Wealth Management Company, said investors were trying to gauge the extent to which Trump will go before softening his tone on the tariff policy.

At 10:04 a.m. ET the Dow Jones Industrial Average .DJI rose 194.14 points, or 0.44%, to 42,715.13, the S&P 500 .SPX gained 16.09 points, or 0.28%, to 5,795.70 and the Nasdaq Composite .IXIC gained 46.23 points, or 0.25%, to 18,331.40.

Materials stocks .SPLRCM led gains among the S&P 500's 11 sectors with a 2% rise, tracking higher metal prices, while energy stocks .SPNY fell 1.9%.

The Wall Street had, however, opened flat after ADP data showed private payrolls increased at the slowest pace in seven months in February, ahead of Friday's crucial payrolls report.

The U.S. Federal Reserve is also slated to unveil its beige book at 2:00 p.m. ET, which will throw light on the impact tariff uncertainty has had on the world's largest economy.

Traders now see the central bank lowering borrowing costs for the first time this year in June, according to data compiled by LSEG.

Investors have sold riskier equities over the past few weeks on fears that Trump's trade policies would amplify inflation pressures, slow the economy and eat into corporate profits, at a time when multiple reports have suggested a cooling economy.

The benchmark S&P 500 .SPX has fallen over 5.7% from its record high, while the tech-heavy Nasdaq .IXIC has dropped over 9% from its peak.

Chipmaker Intel INTC.O dropped 2.1% following Trump's remarks that lawmakers should get rid of a law offering subsidies to the semiconductor industry.

CrowdStrike CRWD.O fell 10.7% after the cybersecurity firm forecast first-quarter revenue slightly below estimates.

Huntington Ingalls HII.N rose 10.3% after Trump said his administration will create an office of shipbuilding in the White House and offer tax incentives.

Advancing issues outnumbered decliners by a 2.13-to-1 ratio on the NYSE, and by a 1.61-to-1 ratio on the Nasdaq.

The S&P 500 posted one new 52-week high and six new lows, while the Nasdaq Composite recorded 18 new highs and 75 new lows.