By Mike Obel
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.
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.
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