President Donald Trump and China's President Xi Jinping Thomas Peter | Reuters

President Donald Trump says China wants a deal, but Wall Street is not totally convinced there will be one. Stocks steadied Wednesday after two days of brutal selling that particularly slammed companies and sectors with exposure to China, like Caterpillar and the semiconductor industry. The market lost its gains late in the day, and the Dow closed barely higher while the was down 4, at 2,879. Ed Keon, chief investment strategist at QMA, said the situation remains uncertain. "The odds of something going wrong are much higher today than they were last Friday, when there was pretty much consensus that deal was going to be done and we would have an announcement," he said.

Keon said the market had believed a deal was coming this week, based on comments from U.S. officials, so when Trump first tweeted on the weekend that he could increase tariffs on Chinese goods, it was a surprise. "That was market consensus a deal was going to be done. I've taken a slightly more defensive position in our portfolios," he said. "If things work out this week, we'll probably go back to where we were last Friday. I would say 2% upside versus 10% downside. I would say the prudent thing is to just take some chips off the table, just in case. We're not heading for the hills. We're just being more cautious." Stocks sold off this week on concerns an increase in tariffs on $200 billion in Chinese goods to 25% from 10% would hurt the global economy and reduce corporate profits. The S&P 500 lost 2% Monday and Tuesday, and another 0.2% Wednesday. Through its commerce ministry, China Wednesday said it would take countermeasures if the U.S. raises tariffs. Before the market open Wednesday, Trump tweeted that Chinese Vice Premier Liu He is coming to the U.S. to make a deal. Several hours later, White House spokeswoman Sarah Sanders said there were "indications" the Chinese delegation wants to reach an agreement. Both comments gave a boost to the stock market, which was higher for most of the day before closing mixed. Dan Clifton, head of policy research at Strategas Research, said he believes the main hang up in the talks has been about tariffs and whether they stay in place after a deal. "The US wants some tariffs to remain in place to ensure China implements the full agreement. With the US insisting on tariffs, China pulled back on other commitments. Everything is linked. Now, Trump is offering China tariffs on $50bn or $500bn of goods. The ball is in China's court. Liu is coming to the US, an acknowledgement that there will be negotiations," said Clifton. Marc Chandler, chief market strategist at Bannockburn Global Forex, said the dollar weakened slightly after Sanders comments about China, but there was still no way to know which way the talks will end up, after the vice premier arrives for talks Thursday. "I would still say this is very precarious. And you are still getting the U.S. spin on things," said Chandler. "I think tomorrow is a wild card."