The Nasdaq Composite Index sank 269.92 points, or 3.41 percent, to 7,647.02.
"The reason we're seeing this recovery is because fundamentals haven't changed", said Kevin Miller, CIO at E-Valuator Funds.
On May 10, U.S.
"That being said, we are going through something that we've never gone through before", Miller said.
Analysts at Wedbush Securities said that Uber had clearly not had a "storybook start" as "investors continue to grapple with the valuation of the tech transportation stalwart especially in the backdrop of a risk-off vibe on the heels of heightened US-China trade tensions and market choppiness".
Gold mining companies rose as the price of gold, another safe-play asset, rose 1.1% to $1,301.80 an ounce.
Mayne Pharma shares crashed 15.04 per cent to 56.5¢ - a four-year low - after the South Australia pharmaceutical company said its revenue and profit was down following competition for its key generic drugs. Bank shares also rose broadly.
Tokyo's Nikkei lost 0.7 per cent, Hong Kong's Hang Seng 1.5 per cent, and the Shanghai Composite 0.4 per cent. The euro held steady at $1.1231.
That came after Beijing retaliated for USA tariff increases Friday on $200 billion of US goods. Trump described the dialogue with China as "very good" and touted his "extraordinary" relationship with Xi.
President Trump's efforts to calm investors while he launches a full-scale trade war with China showed signs of cracking on Monday, as one of his top advisers admitted the approach could damage the USA economy, a Goldman Sachs report said it could lead to higher interest rates, and China vowed to hit $60 billion of US goods with large tariffs on June 1. The list of targeted goods ranges from TV cameras to tequila, and includes a range of agricultural products. The U.S. increases apply to Chinese goods shipped starting Friday, which will take about three weeks to cross the Pacific and arrive at U.S. ports.
While the S&P 500 fell 2.4% on Monday in its biggest daily percentage loss since January 3, U.S. Treasury yields dropped to six-week lows. The Nasdaq dropped 3.4%, its biggest one-day loss of 2019.
If tariff levels remain where they are today, the average American family is expected to pay about $770 in higher costs each year the tariffs remain in place, says Laura Baughman, a co-author of the study and president at Trade Partnerships Worldwide.
Providing some support for Asian markets were comments from Trump late on Monday that trade talks with China are "going to be very successful".
"We can make a deal with China tomorrow, before their companies start leaving so as not to lose U.S. business, but the last time we were close they wanted to renegotiated the deal".
Trump also tweeted on Tuesday the U.S.is in a "much better position now than any deal we could have made", noting that "billions of dollars" are returning to the U.S.
The U.S. tariff hike was enacted in response to the Chinese regime allegedly reneging on commitments negotiated over months of trade discussions.
"The fact that Trump is considering slapping tariffs on a further US$300-billion of Chinese imports is keeping investors jittery", said Jasper Lawler, London Capital Group's head of research.
The yearlong trade frictions between the world's two biggest economies re-escalated last week when the Trump administration announced a 25 per cent punitive tariff on thousands of Chinese products.