(CN) – After a pause to observe the passing of former President George H.W. Bush, Wall Street stumbled Thursday morning following word of the arrest of a senior Chinese technology executive in Canada.
In early trading Thursday morning, the Dow Jones Industrial Average plunged 450 points as traders acted on fears that ongoing trade tensions between the U.S. and China are about to get much worse.
According to Canadian Justice Department spokesman Ian McLeod, Meng Wanzhou, chief financial officer of Huawei Technologies, was arrested on December 1 as she changed planes in Vancouver.
Meng “is sought for extradition by the United States, and a bail hearing has been set for Friday,” McLeod said in a statement.
McLeod declined further comment, citing a publication ban granted by a Canadian judge at Meng’s request that bars police and prosecutors from releasing information about the case.
In addition to being CFO, Meng serves as deputy chairwoman of Huawei’s board and she is the daughter of Huawei founder Ren Zhengfei.
A Huawei spokesperson said Meng faces unspecified charges in the Eastern District of New York.
In April, the Wall Street Journal reported the Justice Department was investigating whether Huawei violated U.S. sanctions on Iran.
“The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng,” a statement from the Huawe said.
“The company believes the Canadian and US legal systems will ultimately reach a just conclusion. Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU,” the statement continued.
China’s Ministry of Foreign Affairs on Thursday called for Meng to be released, describing her detention as a possible human rights violation.
The ministry also said it is still waiting for the United States and Canada to explain why she had been detained.
The controversy is stoking fears that China could retaliate and that relations between the two economic super powers will deteriorate despite what appeared to be progress in easing recent trade tensions at the G-20 summit in Argentina this past weekend.
Markets rallied to start the week after President Donald Trump signaled a trade truce with China after the G-20 meeting.
But the sense of relief on Wall Street proved illusory.
On Tuesday, Chinese officials suggested that while some progress was made, Trump was overstating what was agreed to during his conversations with Chinese president Xi Jinping.
Trump responded by threatening to slap new trade barriers on China in the absence of a deal by the end of February, declaring “I am a Tariff Man” on Twitter.
In response, the Dow Jones plunged almost 800 points, resuming a market sell-off that began in October.
According to the Associated Press, traders continued to shovel money into bonds, a signal that they see weakness in the economy ahead.
The yield on the 10-year Treasury note fell to 2.86 percent from 2.92 percent on Tuesday, a large move.
U.S. stock and bond trading were closed Wednesday because of a national day of mourning for President George H.W. Bush.
Technology companies and banks took some of the heaviest losses in the latest wave of selling. Oracle slid 4.3 percent to $46.64. Citigroup fell 4.8 percent to $59.25.
The S&P 500 index slid 49 points, or 1.9 percent, to 2,650 as of 10 a.m. Eastern Time. The Dow dropped 476 points, or 1.9 percent, to 24,550. The technology-heavy Nasdaq composite lost 121 points, or 1.7 percent, to 7,037.
The Russell 2000 index of small-company stocks gave up 25 points, or 1.7 percent, to 1,455.
The latest losses put the S&P 500 and the Dow back into the red for the year. The Nasdaq was still slightly higher for 2018.