Taiwan Semiconductor Manufacturing (TSM -2.26%) stock lost ground in Tuesday's trading. The company's share price ended the day down 2.3% amid a 0.8% decline for the S&P 500 (^GSPC -0.77%) and a 0.9% decline for the Nasdaq Composite (^IXIC -0.87%). The stock had been off as much as 3.3% earlier in the session.

TSMC stock fell in today's trading in response to the lessening likelihood of trade deals being reached between the U.S. and major trade partners in the near term. The chip manufacturing giant's share price was also dragged lower by the market's bearish reaction to Palantir Technologies' (PLTR -12.01%) first-quarter earnings report.

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TSMC stock slips on trade outlook

The stock market pulled back today as traders once again reassessed the near-term trade outlook.

The stock market has seen significant recovery since tariffs implemented early last month prompted big sell-offs, with indications that the U.S. was moving toward trade deals with China and other key trading partners. But some recent developments and comments have prompted an uptick in caution, and stocks fell today after President Donald Trump met with Canadian Prime Minister Mark Carney and made statements indicating that the U.S. was in no rush to make deals.

Palantir's Q1 report weighs on TSMC and other AI stocks

Palantir reported its first-quarter results after the market closed yesterday, posting adjusted earnings in line with Wall Street's target and sales that topped estimates. The company also increased its full-year sales, adjusted operating income, and free cash flow targets -- but the guidance raise wasn't as big as investors were expecting.

Palantir's leadership position in artificial intelligence (AI) software has helped support very high forward valuation multiples, but the response to the company's Q1 report shows just how high expectations for the company have been. The stock ended the day down 12%, and the move had a bearish spillover effect on TSMC stock and other top AI players.