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(CNN Business) —  

The Dow and broader stock market fell Tuesday as worries about trade tensions between the United States and China weighed on the market.

American and Chinese officials are returning to the negotiating table this week in Washington, DC, but investors are pessimistic about the chances of reaching a deal.

Overshadowing the get-together is a blacklist of 28 Chinese organizations. The United States has effectively barred those companies from importing US technology because of their alleged roles in facilitating human right abuses in China’s Xinjiang region.

Investors are awaiting potential retaliation from Beijing.

The United States is also restricting visas for Chinese officials over the allegations, Secretary of State Mike Pompeo tweeted, an announcement that pushed markets lower Tuesday afternoon.

The Dow (INDU) closed 314 points, or 1.2%, lower. The S&P 500 (SPX) also bounced back, and was last down 1.6%.

The tech-heavy Nasdaq Composite (COMP) traded 1.7% lower.

Stocks closed lower on Monday, following a rather uneventful trading day. It was the market’s first down day in three sessions.

The 10-year Treasury yield was lower for most of Tuesday, last at 1.5340%. The demand for safe-haven bonds was broadly strong thanks to the trade uncertainty. Yields and prices move opposite one another.

Trade is keeping investors on their toes. Some 24 hours after President Donald Trump signed a trade deal with Japan, and a week after the United States slapped import tariffs on the European Union over subsidies for Airbus, there is little indication how it will all play out.

This uncertainty is weighing on business sentiment.

The NFIB small business survey showed optimism fell for a second straight month in September, though it remains relatively high on the whole. The uncertainty index in the survey also rose.

Comments from Federal Reserve Chairman Jerome Powell at the National Association for Business Economics conference briefly helped stocks pare gains Tuesday.

Powell reiterated that the central bank would keep acting “as appropriate,” without commenting on a possible interest rates cut later this month. Expectations for a rate cut at the 30 October meeting are at 82%, according to the CME FedWatch Tool.

The central bank will also announce measures to expand reserves but stressed it wasn’t as much quantitative easing as balance sheet management.

In economic data, the producer price index for September slipped to 1.4% year-over-year, compared with 1.8% expected. Stripping out the volatile food and energy component, the core PPI fell to 2% year-over-year, versus 2.3% expected. That inflation rate is roughly in the target range for the Federal Reserve.

“The decline in core producer prices in September was driven mainly by the volatile trade, trasnport and warehousing services components, but the big picture is that domestically-generated inflationary pressures remain fairly subdued,” wrote Andrew Hunter, senior US economitst at Capital Economics.

All this comes ahead of the consumer price inflation read on Thursday, which is expected to come in at 1.8%, according to economists polled by Refinitiv.