By David Hodari and Akane Otani

U.S. stocks erased their early gains Tuesday as investors weighed signs of progress in trade talks between Washington and Beijing against broader concerns about slowing growth.

The Dow Jones Industrial Average slipped 167 points, or 0.7%, to 24255 after rising more than 300 points earlier in the trading session. The S&P 500 declined 0.4% and the Nasdaq Composite lost 0.3%.

The afternoon's moves marked the latest reversal for the stock market. Futures had rallied early Tuesday after President Trump said on Twitter that "very productive conversations" were happening around trade. Shares of auto makers also rose after China agreed to reduce tariffs on U.S. cars to 15%, down from the current 40%.

Still, as the day progressed, major indexes slipped into negative territory. Some of the selling came after Mr. Trump sparred with top Democrats, threatening to shut down the government if Congress did not fund construction of his proposed border wall.

Between lingering geopolitical tensions and signs of slowing growth around the world, many investors say they are heading into 2019 with muted expectations. BlackRock cautioned in its annual investment outlook that negative returns across both stocks and bonds -- a relatively rare phenomenon -- could become more common as the bull market ages.

"The fragility of the market stems from the awareness that 2019 will not look anything like 2018 in terms of earnings and economic growth," said Art Hogan, chief market strategist at B. Riley Financial. "Investors are getting used to this idea that this could be as good as it gets."

Companies that have become barometers for investors' sentiment around trade talks fell after an initial rally, with Caterpillar and Deere losing around 0.6% apiece.

Apple shares lost 0.9% as the company tried to get a Chinese court to reconsider its decision to ban sales of older iPhones in China.

The court ruling added another source of friction in the trade skirmish between the world's two largest economies, as did the recent arrest in Canada of a top executive at Chinese firm Huawei Technologies.

Elsewhere, the Stoxx Europe 600 rose 1.5%, reversing course after U.K. Prime Minister Theresa May's postponement of a crucial Brexit vote in Parliament Monday sent shares sliding. Ms. May's shock decision to pull the vote further diminished many investors' willingness to bet on U.K. assets, some said.

"If you're a macro investor, you're going to get blown out of the water by events like yesterday's," said John Wraith, head of U.K. rates strategy at UBS. "It makes investors incapable of trading those markets with any conviction whatsoever, so you see a lot of fund managers staying neutral and keeping their exposure to a minimum."

Shares in Asia were mixed, with India's Nifty 50 index slumping 1.9% after the governor of its central bank unexpectedly resigned from his post.

Central banking policy was also a subject of focus in the U.S., where data showed producer prices -- another gauge of inflation -- rising for the third consecutive month.

Investors and analysts widely expect the Federal Reserve to raise short-term interest rates when it meets next week, with CME Group data suggesting the market is pricing in a 78% probability of a rate increase.

Any forward guidance out of the Fed will be closely scrutinized, especially since some investors believe Chairman Jerome Powell has conveyed mixed messages over recent months. Mr. Powell jolted markets after suggesting rates weren't close to neutral and then subsequently appearing to backtrack on those remarks.

"I think he got a bit ahead of himself saying that we're not close to neutral," said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. "I think that was language we weren't prepared for and it helped tip the market. Now I think you'll see his language more focused on gradual patience."

Write to David Hodari at David.Hodari@dowjones.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

December 11, 2018 14:36 ET (19:36 GMT)

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