A trader works on the floor of the New York Stock Exchange at the closing bell in New York, New York, USA, on 04 December 2018. The Dow Jones industrial average lost almost 800 points today, or 3.1%, as investors continued to react to the details of the reported trade deal between the United States and China.New York Stock Exchange, USA - 04 Dec 2018

Wall Street’s faith in the trade truce didn’t last long — and retail stocks took a hammering Tuesday as U.S. President Trump took to Twitter.

Fading optimism in negotiations between the U.S. and China and posturing by Trump combined with worries over the health of the global economy fueled a sell-off in stocks that gave the Dow Jones Industrial Average its worst day since early October.

The leading index tumbled almost 800 points, or 3.1 percent, to close at 25,027.07, while the S&P 500 shed 3.2 percent to 2,700.06, with many retail stocks feeling the pain.

Among the hardest hit were G-III Apparel Group, down 6.7 percent to $40.76; American Eagle Outfitters Inc., 6.8 percent to $19.89; Vince Holding Corp., 5.8 percent to $12.13; and Urban Outfitters Inc., 4.6 percent to $37.50.

This came in stark contrast to Monday, when markets were riding high on news that Trump agreed to hold off from raising tariffs on some Chinese imports to 25 percent from 10 percent as part of a 90-day negotiation.

The agreement also meant that his threat to unleash levies on another $267 billion has been put on ice. Such a move would have most likely dragged the fashion sector into the fray. So far, it has avoided any big hits in the trade war, with the notable exception of handbag-makers.

But while Trump’s actions boosted many retail stocks Monday, jitters began to creep in among investors today. This was likely exacerbated by a series of tweets from Trump stating he was hopeful a deal could be made in 90 days, but reaffirming that he was a “Tariff Man.”

“President Xi and I want this deal to happen, and it probably will,” he tweeted, adding that negotiations had already started, led by U.S. trade representative Robert Lighthizer.

“But if not remember, I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power.”

If a deal cannot be made, the Trump administration has already warned tariffs would rise to 25 percent at the end of the 90-day period. It would also mean that the prospect of levies on a further $267 billion would be more likely. If that happens, the total amount of tariffs would surpass the value of all Chinese imports the U.S. accepted last year.

Adding to market woes on Tuesday was the narrowest gap between yields on two-year and 10-year U.S. Treasury notes since 2007, driven by a flight of cash from traditional riskier stocks to safe haven assets including U.S. government bonds. This is seen as a red light because it has in the past preceded some recessions.

“The post-G20 relief rally in equities seems to be fizzling out today, so attention has shifted instead to some worrying signs emerging in the U.S. Treasury market,” said Oliver Jones, an economist at consultancy Capital Economics. “The inversion of parts of the yield curve is further evidence that investors are coming round to our downbeat view of the prospects for the U.S. economy.”

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