Business / Financial Markets

Wall Street plunge deepens amid trade war worries after Huawei exec’s arrest

AFP-JIJI

Losses on Wall Street deepened in late-morning trade on Thursday as the arrest of a key Chinese executive at the urging of the United States exacerbated trade war fears.

Near 1630 GMT, the Dow Jones Industrial Average was down 2.3 percent at 24,446.09 after earlier falling more than three percent. The blue-chip index has lost almost 1,400 points in the last two sessions.

The broad-based S&P slid 2.0 percent to 2,645.74, while the tech-heavy Nasdaq Composite Index shed 2.4 percent to 6,998.19.

The drops, which pushed both the Dow and S&P 500 into the red for 2018, came after the arrest of Huawei executive Meng Wanzhou in Canada for extradition to the United States in an investigation into suspected Iran sanctions violations by the telecom giant.

The Meng arrest stirred tensions just as the United States and China agreed to a cease-fire in their trade spat while negotiators seek a deal within three months.

“The concept of getting a quick resolution is fading,” said Art Hogan, chief market strategist at B. Riley FBR.

After rallying on Monday following the U.S.-China cease-fire on tariffs announced over the weekend, U.S. markets had fallen sharply on Tuesday on skepticism about the agreement.

U.S. markets were closed on Wednesday because of the funeral of former President George H.W. Bush but resumed their downward move on Thursday following the Meng arrest.

Other headwinds facing stocks include worries over slowing U.S. growth that are prompting greater uncertainty on whether the Federal Reserve will increase interest rates later this month.

Petroleum-linked stocks were also down amid a pullback in oil prices as OPEC members debated a production cut.

Large banks were particularly weak, with Bank of America losing four percent, Citigroup 5.6 percent and JPMorgan Chase 3.5 percent as investors now view the odds of a Fed rate hike on Dec. 19 at 69.8 percent, down from 82.7 percent a week ago, according to futures markets.

Boeing also suffered outsized losses, shedding 6.2 percent on trade war fears and as the aerospace giant continues to face scrutiny following an Oct. 29 crash in Indonesia in which 189 people died.

The head of the carrier, Lion Mentari Airlines, has reportedly threatened to cancel orders for additional Boeing planes.