Tuesday's declines reflected waning confidence in negotiations between the US and China over Washington's complaints that Beijing steals technology or pressures companies to hand it over.
Tit-for-tat tariffs between the world's two largest economic powers have disrupted worldwide trade and slowed the global economy since the trade war started seven months ago. Just $5 a month.
"I am pleased to report that the US has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues", Trump wrote on Twitter. It cautioned there are "still some differences that need more time to be ironed out". But U.S. exports to China have suffered as well, and the U.S. Federal Reserve said Friday that net exports would detract from last year's economic expansion.
Neither government gave more details but both expressed optimism. S & P 500 e-mini futures ticked higher after Trump's tweets on trade, suggesting Wall Street would open on positive footing on Monday morning. He added, "We still have a little ways to go".
Though talks appear to be making substantial progress, it's still too soon to tell how the final agreement will look.
In Asia, the Shanghai Composite retreated from its early advance, losing 0.7 percent on Tuesday to 2,941.52 as traders cashed in recent gains.
President of the American Chamber of Commerce in China (AmCham China) Alan Beebe speaks at a news conference on China business climate survey report in Beijing, China, February 26, 2019.
"This is clearly not the end of the negotiations, let alone the underlying tension between the two countries", said Louis Kuijs of Oxford Economics.
The two sides also haven't agreed how to enforce any deal. Securing some rather minor concessions from China to purchase more soybeans from the US was the easy part, but forcing sweeping changes to its trade practices - the so-called "structural reforms - will be extremely hard, if not potentially unobtainable". She expects relations to "swing between compromise and conflict".
An issue still up in the air involves USA complaints that Chinese authorities and companies pressure US companies to share technology. American officials accuse China of failing to fulfill past promises to change economic regulations.
JP Morgan Asset Management market strategist Tai Hui said the move suggested both sides wanted a settlement of the dispute and added that further tariff escalation would have added to concerns about the USA growth outlook.
Lu noted that Xi has told Trump that he is willing to keep holding meetings between them. Increases that already were imposed remained in place, battering companies on both sides.
But the cracks in the global economy, the stock market turmoil in the fourth quarter, Trump's flagging approval rating, and the pressure from the onset of the 2020 presidential campaign seem to have all combined to change Trump's thinking.
"Playing up the tariffs issue only won't really hurt us", said Geng. "A trade war, by its nature, is nothing more than a war of words, isn't it?" said Geng Yanhua, an employee of an Internet company. "It will be fine as long as no one wages a war".