U.S. stocks plunged Tuesday on uncertainty about what exactly was decided regarding the U.S.-China trade dispute and growing worries about the economy's health.
A meeting between President Trump and Chinese President Xi Jinping, which took place on the sidelines of the G-20 summit, resulted in the two nations agreeing to a 90-day trade truce.
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That truce is designed to give time to resolve top trade issues ranging from forced technology transfers, intellectual property protection, non-tariff barriers, cyber theft and agriculture practices.
But uncertainty about when the truce would begin troubled investors. Larry Kudlow, Trump’s top economic adviser, said Monday the truce would begin Jan. 1, 2019, but the White House then said the 90-day period had begun Dec. 1.
Shares of export-oriented companies vulnerable to the U.S.-China trade dispute -- such as Caterpillar and Boeing -- were being hammered.
In addition, shares of tech companies, banks and industrial corporations paced the sell-off. Shares of smaller companies fell more than the rest of the stock market.
"You have the drop in bond yields and the implications on growth going forward," said Willie Delwiche, investment strategist at Baird. "The bigger issue is you have this unwind from yesterday's rally."
The broad-based S&P 500 was on course for its biggest one-day percentage drop in six weeks, according to Reuters.
U.S. stocks were also being hammered by the bond market, where investors rushed for safety, something that slammed bond yields. The yield on the 10-year Treasury fell nearly 3 percent. In addition, investors eyed the spread between the 3-year and 5-year Treasury yields. They inverted on Monday for the first time since 2007, which means the yield on the 5-year fell below the 3-year. Known as a yield curve inversion, it has typically been considered an indication of recession because it means the interest rate on long-term bonds is lower than the rate on short-term bonds.
This year's storms is also emerging as a weight on the market. Dollar General shares were down in early afternoon trading nearly 7 percent after the discount retailer trimmed its outlook for the fourth quarter to account for the damage from this year's hurricanes. The storms raised the company's costs and cut its earnings.
Crude oil prices extended gains, rising nearly 2 percent to $53.99 per barrel.
Meanwhile in Asia stocks closed mostly lower. Japan’s Nikkei 225 closed down 2.39 percent and South Korea’s Kopsi closed down 0.8 percent. Chinese stocks bucked the trend, with the Shanghai Composite Index gaining 0.4 percent.
European equities fell, with the Britain’s FTSE 100 off 0.64 percent.
On Monday, the first trading day of the month, optimism about the trade deal boosted stocks. The Dow Jones Industrial Average registered a 287.97 point jump or 1 percent. The S&P 500 and the Nasdaq Composite also turned in gains of over 1 percent.
The Associated Press contributed to this story.