The Dow dropped 700 points early Thursday after the Canadian arrest of a Chinese tech executive threatened to inflame trade-war tensions.
That’s on top of a 799-point drop that slammed the Dow on Tuesday ahead of Wednesday’s market close for the funeral of President George H.W. Bush. The two-day selloff brought losses to 1,500 points, putting stocks on course to have one of their worst weeks of the year.
Chinese officials on Wednesday demanded the return of Meng Wanzhou, the chief financial officer of Huawei Technologies and a member of its board, who was arrested by Canadian law enforcement in Vancouver on Saturday at the request of US authorities.
Wanzhou is also the daughter of Huawei’s founder, Ren Zhengfei, one of China’s most prominent businessmen.
“Forget the trade war, it is now all-out economic war with China apparently,” Chris Rupkey, chief market economist at MUFG, wrote in a note. “We are awaiting the next tweets from Washington to correct this latest swoon in the stock market.”
The Dow Jones industrial average was recently off 694.25 points, or 2.8 percent, at 24.332.82.
The arrest comes at a delicate time in US-China relations. Over the weekend, President Trump had tweeted that he was suspending an increase in tariffs after reaching a deal with China.
Wall Street became increasingly skeptical of any deal, however, after administration officials gave conflicting accounts and China declined to confirm any trade deal.
Trump also sent markets scrambling Tuesday after he tweeted, “I am a Tariff Man.”