The Dow drops 805 points, or 3%, on Tuesday. It was down about 700 points.
The S & P 500 declined 2.5%, while the Nasdaq tumbled 3%.
"People were still very concerned about the trade," said Dan Suzuki, portfolio strategist at Richard Bernstein Advisors.
President Donald Trump did not help Wall Street's trade was worries on Tuesday. Trump said that he would "happily" sign a fair deal with China.
"President Xi and I want to deal with this, and it probably wants to, "Trump tweeted. "But if not remember … I am a Tariff Man."
Those words are not likely to become better. Steel and aluminum tariffs have lifted raw material costs and caused disarray in supply chains. And uncertainty about trade policy makes it very difficult for companies to make investment decisions.
The gap between the 10-year and two-year Treasury yields dropped on Tuesday to the minute since just before the Great Recession.
"Bannister told reporters on Tuesday. It's too tight and risky to inversion because you do not know what the outcome will be." "Even if the Fed pauses, they may have done too much."
A flattening yield curve and slowing economic growth hurt the profitability of banks.
But Suzuki cautioned that the markets could be overreacting. He pointed to strong corporate profits and the fact that the yield curve has not yet inverted.
"We do not see signs of an impending recession," Suzuki said. "There is a gap between market fear of a deterioration in the fundamentals and the actual fundamentals themselves."