From Fred Imbert: The Dow Jones Industrial Average turned negative around midday Eastern Time on Tuesday, erasing a sharp gain from earlier in the session as volatility continues to grip Wall Street.
Stocks initially rose more than 1 percent across the board amid signs that U.S.-China trade relations could be improving.
Bloomberg News reported earlier on Tuesday that China is moving toward cutting tariffs on cars made in the U.S. to 15 percent from the current 40 percent. The proposal has been submitted to the Chinese Cabinet and will be reviewed in the coming days, the report says.
President Donald Trump also tweeted the administration was having “very productive conversations going on with China,” adding: “Watch for some important announcements.”
Shares of Ford Motor, General Motors and Fiat Chrysler all rose at least 0.5 percent.
Meanwhile, Chinese Vice Premier Liu reportedly said Tuesday that he had been in discussion with U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, with the aim of de-escalating a global trade war.
“It is important for the market to get positive headlines at this time,” said Quincy Krosby, chief market strategist at Prudential Financial. “This is sustainable if we don’t hear a contradiction. This has been part of the problem. The algorithms work instantaneously and if we get someone with an opposing view we could turn around.”
The positive reports on trade come as Wall Street tries to regain its footing. Worries over trade and of a possible economic slowdown sending stocks for a volatile ride. The Dow and S&P 500 were both down more than 1 percent for the year heading into Tuesday’s session. Earlier this year, they hit all-time highs.
Last week, mixed messages surrounding a U.S.-China trade truce struck between Trump and Chinese President Xi Jinping led the major averages to their worst weekly performance since late March.The two indexes also fell sharply on Monday, along with the Nasdaq, before a sharp rebound led by tech stocks.
“There are two major factors here: a new level of trade talks is under way, and the number of bearish market calls got significantly higher,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “That usually signals the end to an ongoing sell-off.”
–CNBC’s Spriha Srivastava contributed to this report.