Aug 7 (Reuters) - Wall street's main indexes trimmed their early gains on Thursday amid concerns over the Federal Reserve's independence, following a report that Fed Governor Christopher Waller was President Donald Trump's top candidate for the central bank's chair post.
The Bloomberg News report comes in the wake of Trump's repeated criticism of current Chair Jerome Powell for not cutting borrowing costs that has raised uncertainty over the Fed's independence. Powell's tenure is set to end in May.
"There's a lot of uncertainty as to who's going to drive the Fed. Not just because we have to now redraw who this new person is, it's whether or not they'll be able to navigate us through this (the current scenario)," said David Lundgren, portfolio manager, chief market strategist at Little Harbor Advisors.
Trump is also anticipated to announce his interim replacement for Fed Governor Adriana Kugler in the coming days amid expectations that the nominee would be a policy dove who will likely favor bringing interest rates lower.
At 10:59 a.m. ET, the Dow Jones Industrial Average (.DJI), fell 230.10 points, or 0.52%, to 43,963.02, the S&P 500 (.SPX), gained 0.26 points, or 0.00%, to 6,345.62 and the Nasdaq Composite (.IXIC), gained 97.56 points, or 0.46%, to 21,266.98.
On the day, the tech-heavy Nasdaq remained a standout, holding onto gains as hopes that major technology giants could avoid Trump's latest tariffs on chip imports.
Apple's (AAPL.O), shares climbed 2.2%, adding to a 5.1% climb on Wall Street in the prior session, after Trump said the iPhone maker will invest an additional $100 billion in the U.S., bringing its total commitment to $600 billion over the next four years.
Trump also announced a tariff of about 100% on imports of semiconductors, but said it would not apply to companies that are manufacturing in the U.S. or have committed to do so.
Shares of chipmakers Nvidia (NVDA.O), and Broadcom (AVGO.O), rose 2.3% each, while peer Advanced Micro Devices (AMD.O), advanced 5.3%.
The above stocks boosted tech (.SPLRCT), by 1.1%, leading the sectoral gains, while the healthcare index (.SPXHC), fell to the bottom with a 1.6% fall.
Drugmaker Eli Lilly (LLY.N), dropped 14.4% and was set for its worst day in a quarter-century after reporting data on its late-stage oral weight-loss drug. The drugmaker also raised its full-year profit forecast.
Trump's higher tariffs of 10% to 50% on dozens of trading partners took effect on Thursday.
Fresh signs of a faltering labor market - especially after a disappointing July payrolls report - have fueled speculation that the Fed could soon kick off a rate-cutting cycle.
New data showed jobless claims came in at 226,000 for the week of Aug. 2, surpassing economists' expectations of 221,000.
Traders are now betting almost fully on a September rate cut, with at least two moves expected this year, CME Group's FedWatch tool showed.
Meanwhile, chipmaker Intel (INTC.O), lost 0.7% after Trump called for its chief executive's resignation, saying, "the Intel CEO is highly conflicted and should resign immediately."
Second-quarter earnings barrage continued at full throttle. DoorDash (DASH.O), topped revenue estimates and forecast a stronger-than-expected gross merchandise value for the current quarter. Its shares jumped 2.9%.
Advancing issues outnumbered decliners by a 1.21-to-1 ratio on the NYSE, while declining issues outnumbered advancers by a 1.19-to-1 ratio on the Nasdaq.
The S&P 500 posted 20 new 52-week highs and five new lows, while the Nasdaq Composite recorded 67 new highs and 67 new lows.
Reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru; Editing by Maju Samuel
