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U.S. stocks tumble, Trump proves to have overstated U.S.-China trade progress and Theresa May suffers a trio of Brexit defeats that put her deal with the EU at risk. Here are some of the things people in markets are talking about.

Equities Drubbed

U.S. stocks plunged, with the Dow Jones Industrial Average tumbling almost 800 points and the S&P 500 dropping more than 3 percent, as a litany of concerns wiped out Monday’s rally in risk assets. Trade-sensitive shares sank as angst mounted that the U.S. and China made no meaningful progress on the trade front last weekend. Financial shares got hammered as the yield curve continued to flatten, even as a Federal Reserve official offered hawkish comment. Losses accelerated and trading volumes in S&P 500 futures spiked after contracts broke below their 200-day moving average. Adding to the risk aversion was news that U.K. Prime Minister Theresa May’s push to avoid a so-called "hard Brexit" may be at risk. Traders are even starting to bet that the Fed will cut interest rates as soon as 2020. The swaps market has moved up the timing for when it sees the hiking cycle peaking, toward the end of 2019 or early 2020, a period when the Fed’s own projections indicate tightening will still be under way.

Backtracking on Trade Progress

President Donald Trump turned to a familiar playbook after his high-stakes dinner with Chinese President Xi Jinping on Saturday: boast of a big victory first, and let a more nuanced reality sink in later. Trump followed the same script after trade talks with the European Union and Canada and his nuclear summit with North Korea’s Kim Jong Un. His optimistic comments can send markets soaring, before investors realize the president’s claims of success may have been exaggerated. The pattern played out again with auto stocks this week. Shares of General Motors Co., Ford Motor Co., Daimler AG and BMW AG surged Monday after Trump tweeted: “China has agreed to reduce and remove tariffs on cars coming into China from the U.S.” But by late Tuesday morning, Trump not only acknowledged there was no deal but questioned whether one was possible. He declared himself “Tariff Man,” while also suggesting that he could extend a 90-day truce in his trade war with China.

Mayday

Prime Minister Theresa May is battling to get her Brexit deal through Parliament, and has opened five days of debate in the House of Commons. In its third defeat of the day, the government lost a vote on an amendment put forward by Tory rebel Dominic Grieve giving more power to Parliament to shape Brexit if — as expected — lawmakers reject May’s deal. The government was also found in contempt of Parliament over its failure to publish its internal legal advice on the Brexit deal. It has now committed to doing so on Wednesday. “This is not the deal the country was promised,” opposition Labour leader Jeremy Corbyn said. “And Parliament cannot and I believe will not accept it. The false choice between this bad deal and no deal will also be rejected.” Separately, former Bank of England Governor Mervyn King accused May’s government of “incompetence of a high order” for negotiating a Brexit deal that is the “worst of all worlds.”  

Emerging-Market Resilience

When U.S. stocks catch a cold, emerging markets tend to get the flu. That didn’t happen Tuesday, when American stocks slumped by 3.2 percent and an emerging-markets exchange-traded fund fell by “only” 2.1 percent. The relative resilience in emerging markets undermined the argument that trade worries were a major cause of the rout in U.S. stocks. The iShares Emerging Markets ETF (ticker EEM) has a significant weighting toward China-linked companies, which presumably would suffer if trade concerns are paramount. EEM hasn’t fallen at least 2 percent while beating the S&P 500 ETF by 1 percentage point on the same session in nearly a decade. The last time? Feb. 23, 2009, at the tail end of the bear market that encompassed the financial crisis.

Apple Suppliers Tumble

Major suppliers to Apple Inc.’s iPhone fell Tuesday, after Cirrus Logic Inc. joined the ranks of companies that have recently cut their outlooks, a trend that has underlined concerns about demand prospects for one of the most important product lines in the technology sector. Cirrus sank as much as 6.3 percent before paring declines. The chipmaker cut its revenue outlook for the December quarter due to “recent weaknesses in the smartphone market.” Lumentum Holdings Inc., which cut its own outlook last month, fell as much as 5.8 percent. Qorvo Inc., another supplier that recently slashed its forecast, shed as much as 4.1 percent. Apple dropped 2.4 percent, bringing the the Dow component’s decline to more than 22 percent from a record in early October, a rout that has cost the company its status as the world’s largest by market value. 

What we’ve been reading

Here’s what caught our eye over the past 24 hours.

• Shenzhen stocks are big losers two years after opening to the world.
• Treasury bears are facing a squeeze of epic proportions.
• For radical sushi experiences, head to this hotel room.
• How Carlos Ghosn might have hidden $70 million from those who paid him.
• Why China’s ‘have another baby’ pleas may be too late.
• The first book about a stock market is being sold for $300,000.

To contact the editor responsible for this story: Cormac Mullen at cmullen9@bloomberg.net

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