Stocks plunge on worries about US-China trade talks

The Dow hit its lows of the day, falling more than 350 points, after Larry Kudlow, the director of the White House's National Economic Council, suggested that the US and China weren't close to a new trade pact. The S&P 500 and Nasdaq also retreated further.

"The president has indicated that he's optimistic with respect to a potential trade deal," Kudlow said on Fox Business. "But we've got a pretty sizable distance to go here."

The Dow was only down about 100 points before his comments. Shares of major multinational US firms that do significant business in China, including Apple, Boeing, Caterpillar and Intel, were among the bigger losers in the Dow.

Separately, CNBC reported Wednesday morning that a senior US administration official said it was "highly unlikely" Trump would meet with China's President Xi Jinping before the March 2 deadline to reach a new trade deal.

A meeting after that is still possible, but details aren't yet clear, a US official said.

The stock market has enjoyed a solid comeback so far this year in part because investors had grown hopeful that Washington and Beijing would be able to reach a new deal on trade sometime in the next few weeks.

Others in the Trump administration have also been more upbeat about how talks with China are going.

Treasury Secretary Steven Mnuchin, who will be heading to Beijing next week to conduct more trade talks, has been more optimistic about a deal getting done before a 90 day trade truce expires.

Mnuchin told CNBC on Wednesday that the administration has had "productive talks" with China.

Trump himself has said he is still hopeful a new agreement could take place and has hinted that there could be a handshake deal with China to extend talks beyond March 2.

But investors are clearly growing more nervous and increasingly wary of all the conflicting reports. Plus, there is a lot more at stake than just tariffs.

The United States and China are also expected to discuss the concerns that many American (and global for that matter) tech firms have about intellectual property theft in China.

The chief financial officer of Chinese tech giant Huawei is currently being detained in Canada at the request of Washington, adding to the tension between the two countries.

--CNN's Kevin Liptak contributed to this report