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US stocks tumbled on Tuesday, as recession fears gripped markets, outweighing the optimism over US-China talks aimed at tariff reductions.

The Dow Jones Industrial Average fell 194.14 points, or 0.62%, at the open to 30,903.12.

The S&P 500 opened lower by 32.72 points, or 0.86%, at 3,792.61, while the Nasdaq Composite dropped 163.66 points, or 1.47%, to 10,964.18 at the opening bell.

Treasuries erased earlier losses, with the 10-year yield around 2.81%. The dollar rose.

US and Chinese officials held discussions after reports that Washington is close to rolling back some of the trade levies imposed by the former administration. But investors continue to fret over a potential US recession and stubborn inflation. While reducing tariffs on imported Chinese goods could impact consumer prices in the US, some suggest that it could do little to cool inflation.

“With the first half of the year moving into the rear-view mirror investors can’t help but wonder what lies ahead in a year that thus far has wrought heightened levels of uncertainty, disruption and dysfunction that has rattled asset class values across the spectrum of the good, the bad, and the ugly," said John Stoltzfus, chief investment strategist at Oppenheimer & Co.

US markets reopened Tuesday after capping 11 declines in the past 13 weeks as a first-quarter contraction in the world’s largest economy boosted the prospects of a recession. At the same time, consumer prices are far from peaking with inflation surging to 8.6% in May that left little room for the Federal Reserve to slow monetary tightening.

“The Fed will likely remain aggressive in its fight against inflation for now," said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. “At the same time, European growth is slowing down fast. This just puts additional fire on the growth concerns about the US."

In Australia, the central bank raised its key interest rate as expected to 1.35%. It’s among more than 80 central banks to have raised rates this year. The nation’s dollar weakened after the decision.

Crude oil fluctuated around $105 per barrel. Bitcoin traded below the $19,500 level.

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