Stocks reverse course after Trump spars with Pelosi and Schumer

President warns of shutting down government

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President Donald Trump talks about border security with Senate Minority Leader Chuck Schumer (D-NY; right) and House Minority Leader Nancy Pelosi (D-CA) as Vice President Mike Pence sits nearby in the Oval Office on Dec. 11, 2018, in Washington, D.C.

(CNN) - So much for turnaround Tuesday on Wall Street. Tumultuous Tuesday is more like it.

All three of the major indexes were whipsawed after a contentious public meeting between President Donald Trump and Democratic congressional leaders Chuck Schumer and Nancy Pelosi.

The Dow ended the day with a more than 50-point loss. But it had been down more than 200 points earlier in the day. The S&P 500 was flat while the Nasdaq finished Tuesday with a slight gain after both also briefly fell into negative territory.

Stocks fell from their peaks after Trump told Pelosi and Schumer that there must be funding for a US-Mexico border wall from Congress and warned that he would shut down the government without it.

But investors were heartened earlier in the day by renewed hopes that the United States and China might be able to reach a new deal on trade, despite tensions over the arrest of the CFO of Chinese tech giant Huawei.

Trump tweeted Tuesday morning that there were "very productive conversations going on with China!" and added that people should "watch for some important announcements!"

Still, the market seemed skeptical. Dow components with significant exposure to China, including Apple (AAPL), Boeing (BA), 3M (MMM) and McDonald's (MCD), were all lower.

Alec Young, managing director of global markets research for FTSE Russell, wrote in a report Tuesday that "despite incrementally positive overnight news on US-China trade negotiations, much remains unresolved."

Young noted that "if the trade war continues to escalate," that could lead to significant cuts in forecasts for US economic growth in 2019. He added that earnings projections for Corporate America would need to be cut as well.

"That's why cyclical stocks keep shrugging off what look like positive overnight trade headlines. The uncertainty needs to be removed vs. just reduced a little bit," he said.

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