The Dow Jones Industrial Average more than erased a 155-point rally on Tuesday as a recession indicator from the bond market worsened and fears around the U.S.-China trade war weighed on equity trading.

The Dow fell 120.93 points during the session to finish at 25,777.90, reversing a morning rally that sent the 30-stock index up more than 150 points. The S&P 500 fell 0.32% to 2,869.16 while the Nasdaq Composite dropped 0.34% to finish at 7,826.95 amid losses in Netflix, Nvidia and T-Mobile.

The spread between the 10-year Treasury yield and the 2-year rate fell to negative 5 basis points, its lowest level since 2007. This is called a yield-curve inversion. Experts fear it because in the past it has preceded recessionary periods. The 3-month Treasury bill rate also traded higher than the 30-year bond yield.

"The primary thing is yields are going down and going down with some acceleration," said Art Cashin, director of floor operations at UBS.

Bank shares fell broadly. Bank of America fell 1.1% lower while Citigroup dropped 1.6%. J.P. Morgan Chase slid 1%.

Sentiment was also dampened after Hu Xijin, editor-in-chief of the Global Times in China, tweeted that China is "putting so much emphasis on trade talks," adding that "it's more and more difficult for the US to press China to make concessions" as China's economy becomes increasingly driven by its domestic growth. China announced measures aimed at boosting consumption, including potentially removing car-buying restrictions.

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"Markets have been headline-driven, to say the least" said Erik Bregar, head of FX strategy at the Exchange Bank of Canada. "The whole U.S.-China trade war is very hard to trade around right now." He added traders should pay close attention to technical levels when navigating this market as they can cut through "noisy" headlines.

Tuesday's moves follow a rally in the previous session. The Dow, S&P 500 and Nasdaq Composite all rose more than 1% on Monday as semiconductor stocks and Apple climbed. The major indexes are all down at least 3.7% for the month of August.

The major indexes rose after President Donald Trump said he expected the U.S. to strike a trade deal with China, citing economic pressure on Beijing. China also called for a resolution to the ongoing dispute.