But "an accompanying "reinversion" of the Treasury yield curve suggests that the best days for US equities may be over even if the two economies eventually resolve their dispute".
Ride-sharing company Uber tumbled another 10.8% on its first full day of trading following its rocky debut on the stock market Friday.
Stocks closed sharply lower Monday as an escalating trade war between the US and China rattled Wall Street. Gold prices slipped 0.25% to $1.296,44 per ounce. European indexes were mostly down a bit more than 1%.
Stocks saw a brief recovery on Friday after President Trump hailed talks with Chinese negotiators "constructive". That helped lift USA stock futures more than 0.5%, though sentiment remained fragile.
"As China's economic and geopolitical rise butts up against existing USA interests, eleventh hour negotiations and brinkmanship will be a recurring theme which the markets will learn to price in", they said. "But the hopes for that are a bit misplaced now", he said. The Hang Seng Index sank 1.5 percent while Shanghai shed 0.7 percent and Tokyo ended down 0.6 percent, marking its seventh straight loss.
"This just got messier and more expensive to the global economy and until we get break here, markets are going to be under pressure", said Art Hogan, chief market strategist at National Securities in NY.
Kudlow says negotiations are ongoing as his boss calls for higher tariffs on about $300 billion more in Chinese imports.
U.S. -listed Chinese companies traded mostly lower on Monday with nine of the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on a downbeat note.
China on Monday announced tariff increases on $60 billion of US imports, particularly farm products like soybeans.
Trump said Monday he would meet Xi during the Group of 20 meeting of major economies six weeks from now on June 28 and 29 in Osaka, Japan.
On Monday, the Dow Jones Industrial Average fell 2.4% and the tech-heavy Nasdaq lost 3.4% for its biggest drop of the year.
On currency markets the yuan - which has fallen more than two percent since Trump last week threatened to hike tariffs - edged up slightly against the dollar, while the greenback was also slightly lower against the pound and euro. Farming equipment maker Deere drove losses in the industrial sector, reflecting worries about the impact of tariffs on US farmers. They rose back above shorter-dated three-month bill yields after the yield curve inverted on Monday for the second time in less than a week. U.S. President Donald Trump said he was optimistic about resolving the trade dispute.
Many market players "downplayed" the significance of the March inversion, he added, believing the Federal Reserve would sit on its hands so as not to derail the economic expansion.
The US is also considering increasing tariffs on all the remaining goods it buys from China, estimated to be valued at around $300bn.
US lawmakers from both parties have expressed support for Trump's hard stance against the Chinese regime. "So I doubt they'll try to sell Treasuries".
Volume on U.S. exchanges was 8.24 billion shares, compared to the 6.97 billion-share average over the last 20 trading days. -China trade discussions could hurt the earnings outlook.
Those hopes are now being dashed and replaced by concerns that the trade war could crimp what is otherwise a mostly healthy economy.
He said: "The President of the United States owes farmers like myself some type of plan of action".
Energy futures recovered, with US crude gaining 18 cents to $61.22 per barrel in electronic trading on the New York Mercantile Exchange. The L2030 fund, for example, suffered less than a 12% maximum drawdown during the big market sell-off in the fourth quarter of 2018, and reached new all-time highs in April 2019.