Markets closed mostly lower on Tuesday after a volatile trading session that saw major indexes oscillating between positive and negative territory, as investors weighed escalating political tensions against optimism surrounding U.S.-China trade talks. The last half hour of trading saw major indexes falling sharply, with the Dow and S&P 500 ending in the red, while the Nasdaq making marginal gains. The Dow Jones Industrial Average (DJI) declined 0.2% to close at 24,370.24. The S&P 500 shed 0.04% to close at 2,636.78. The Nasdaq Composite Index closed at 7,031.83, advancing 0.2%. A total of about 8.01 billion shares were traded on Tuesday, matching the average for the last 20 sessions. Decliners outnumbered advancers on the NYSE by a 1.17-to-1 ratio. On Nasdaq, a 1.21-to-1 ratio favored declining issues.How did the Benchmark Perform?The Dow shed 53.02 points, after gaining as much as 368 points at one time of the session. However, it also declined 202 points at one time. Shares of 3M Company MMM declined 0.4%.The S&P 500 gave up 0.94 points. On Monday, the S&P 500 had bounced off an eight-month low to end higher. Financials and industrials were the biggest laggards. The Financial Services Sector SPDR (XLF) and the Industrial Select Sector SPDR (XLI) lost 1% and 0.6%, respectively. However consumer staples was the biggest gainer. The Consumer Staples Select Sector SPDR (XLP) gained 0.8%. Three of the 11 major S&P 500 sectors ended in negative territory.The tech-heavy Nasdaq advanced 11.31 points, helped by a rally in tech stocks. Shares of Amazon.com Inc. AMZN and Facebook, Inc. FB gained 0.1% and 0.2%, respectively. Shares of Alphabet, Inc. GOOGL gained 1.2%. Facebook has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Political Tensions Weigh on MarketsOn Tuesday, President Donald Trump engaged in a contentious fight with Democratic leaders Nancy Pelosi and Chuck Schumer over funding for a wall on the Mexican border. Trump even threatened to shut down the government if more money wasn’t allocated toward building the wall along the U.S.-Mexico border.Later in the session, investors felt even more jittery following reports from BBC that claimed enough letters were submitted by Conservative lawmakers to initiate a vote of no confidence against the leadership of British Prime Minister Theresa May, who so far has struggled to reach a deal on Brexit. This further dented the already battered investor sentiment. Lingering concerns of slowing global economic growth has already been taking its toll on markets. On Tuesday, growing political tensions further rattled markets leading to huge selloffs around noon.Optimism Surrounding Trade Boosts SentimentEarlier during the day, markets saw robust gains on news that the United States and Chinese officials had discussed a roadmap for trade talks. Trump called the move “very productive”. Further reports of China moving toward slashing tariffs on cars made in the United States from to 15% from the current 40% lifted investor’ sentimentsThis sent shares of U.S. carmakers on a rally. However, the initial optimism was somewhat dampened after Washington Post reported that the United States would condemn China over hacking and economic espionage. This once again escalated tensions between the two countries, thus taking a toll on markets.Stocks That Made HeadlinesAmerican Eagle (AEO) Q3 Earnings Beat, Q4 View Hurt StockAmerican Eagle Outfitters, Inc. AEO declined nearly 5% on Dec 11 as investors remain cautious of the company’s holiday quarter (fourth-quarter fiscal 2018) guidance, which lagged analysts’ expectations. (Read More)Looking for Stocks with Skyrocketing Upside? Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.See the pot trades we're targeting>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Facebook, Inc. (FB): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report 3M Company (MMM): Free Stock Analysis Report American Eagle Outfitters, Inc. (AEO): Free Stock Analysis Report To read this article on Zacks.com click here.