Investing.com - Stocks slumped in midday trading Thursday as the Dow and S&P erased yearly gains and traders lost hope of a potential trade deal between the U.S. and China amid the arrest of a top executive of China company Huawei Technologies.
The S&P 500 fell 66 points, or 2.47%, as of 11:13 AM ET (16:13 GMT), while the Dow decreased 673 points, or 2.69%, and the tech-heavy Nasdaq Composite lost 139 points, or 1.95%.
Meng Wanzhou, the chief financial officer at the Chinese smartphone company Huawei was arrested in Canada on an an extradition request by the U.S. The U.S. has been investigating whether or not she violated sanctions against Iran. China has asked for her immediate release.
The arrest happened just one-week after U.S. President Donald Trump and his Chinese counterpart Xi Jinping agreed to a 90-day trade truce. Investors fear the arrest could derail any potential trade talks between the two countries.
"In general, we all have the same questions we did on Tuesday," said Art Hogan, chief market strategist at B. Riley FBR in New York. "The news on Huawei throws another level of uncertainty on our ability to actually come to some agreement with China."
A 10-year-high U.S. trade deficit also suggested the Trump administration's tariff-related measures to shrink the trade gap have been ineffective.
All 11 major S&P sectors were lower. Technology stocks were among the hardest hit, with Apple (NASDAQ:AAPL) down 3%, Netflix (NASDAQ:NFLX) falling 0.4% and Amazon.com (NASDAQ:AMZN) dipping 2%. Financial stocks were also down, with the S&P 500 Financials down 3%.
In commodities, gold futures rose 0.4% to $1,248.00 a troy ounce and crude oil decreased 3.6% to $50.97 a barrel. The U.S. dollar index, which measures the greenback against a basket of six major currencies, lost 0.35% to 96.67.
-- Reuters contributed to this report.