U.S. stocks tumbled in early trading Thursday following a sell-off in overseas markets, knocking more than 450 points off the Dow Jones Industrials Average.
The broad market decline came as the arrest of a senior Chinese technology executive overshadowed some positive comments on trade from Beijing, threatening to worsen trade tensions between the U.S. and China.
Oil prices fell sharply as traders appeared to doubt that an expected production cut by OPEC will be enough to boost the price of crude.
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 per cent from 2.92 per cent 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 per cent to $46.64. Citigroup fell 4.8 per cent to $59.25.
The S&P 500 index slid 49 points, or 1.9 per cent, to 2,650 as of 10 a.m. Eastern Time. The Dow dropped 476 points, or 1.9 per cent, to 24,550. The technology-heavy Nasdaq composite lost 121 points, or 1.7 per cent, to 7,037.
The Russell 2000 index of small-company stocks gave up 25 points, or 1.7 per cent, 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.
Major indexes overseas also fell sharply. The DAX in Germany dropped 3 per cent, while France’s CAC 40 lost 2.9 per cent. The FTSE 100 in Britain declined 2.8 per cent.
Canadian authorities arrested the chief financial officer of China’s Huawei Technologies on Wednesday for possible extradition to the U.S.
Meng is a prominent member of Chinese society as deputy chairman of the board and the daughter of company founder Ren Zhengfei.
The arrest came days after President Donald Trump met with Chinese President Xi Jinping to discuss the two nation’s escalating trade dispute. China has demanded Meng’s immediate release.
“We are closely watching the developments in Asia after reports that Canada has arrested the Huawei CFO facing U.S. extradition for allegedly violating Iran sanctions. This headline is quite significant as the U.S. government is attempting to persuade allies to stop using Huawei equipment due to security fears, and this headline could weigh negatively on tech stocks,” said Stephen Innes, head of trading at Oanda in Singapore.
The news weighed on markets in Asia.
Hong Kong’s Hang Seng index tumbled 2.5 per cent and Japan’s benchmark Nikkei 225 fell 1.9 per cent. Australia’s S&P/ASX 200 lost 0.2 per cent, while South Korea’s Kospi sank 1.6 per cent. Shares also fell in Taiwan and all other regional markets.
OPEC countries gathered in Vienna Thursday to find a way to support the falling price of oil. Analysts predicted the cartel and some key allies, like Russia, would agree to cut production by at least 1 million barrels per day. OPEC heavyweight Saudi Arabia indicated it was in favour of such a cut.
The expectation did not keep the price of oil from falling, however, as investors focused on the potential economic disruption from any escalation in the U.S.-China trade dispute.
Benchmark U.S. crude slid 2.9 per cent to $51.38 a barrel in New York. Brent crude, used to price international oils, dropped $1.48 to $60.08 per barrel.
Alex Veiga, The Associated Press