The Dow Jones industrial average plunged more than 500 points on Thursday, the first day of trading after U.S. authorities secured the arrest of a Chinese technology company executive, fueling fears that the trade war with China is heating up.

News broke late Wednesday that Canadian law enforcement had arrested Meng Wanzhou, chief financial officer of Huawei Technologies, a major Chinese tech firm that has been linked to the Chinese military.

U.S. officials have requested her extradition, citing a suspected sanctions violation.

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A Chinese Foreign Ministry official on Thursday demanded Meng’s release and called her detention a possible human rights violation.

The incident sparked fears that China could retaliate and that relations between the two economic superpowers will deteriorate despite what appeared to be progress between President Trump Donald John TrumpOmar fires back at Trump over rally remarks: 'This is my country' Pelosi: Trump hurrying to fill SCOTUS seat so he can repeal ObamaCare Trump mocks Biden appearance, mask use ahead of first debate MORE and Chinese President Xi Jinping at the Group of 20 summit (G-20) in Argentina over the weekend.

The Dow was down 517 points, or 2 percent, just after noon on Thursday, while the S&P 500 was off 45 points, just more than 1.5 percent, and the Nasdaq composite dipped by 54 points, or three-quarters of a percentage point, continuing a market sell-off that began in October.

Markets rallied on Monday after Trump signaled a trade truce with China after the G-20 meeting. But any sense of relief has since evaporated.

Trump roiled the markets on Tuesday when he threatened to slap new trade barriers on China in the absence of a deal by the end of February, declaring on Twitter “I am a Tariff Man.” That move sent the Dow Jones plunging by almost 800 points.

Market futures showed some respite on Wednesday, when markets were closed for a national day of mourning to remember the late President George H.W. Bush, who died last week at the age of 94.

Other indicators, however, show the U.S. economy remains strong.

The ISM non-manufacturing index, which measures the services sector, exceeded expectations, posting a mark of 60.7 compared to the 59.7 expected by Wall Street analysts.

Asked about Trump’s impact on the markets, Senate Republican Whip John Cornyn John CornynThe Hill's Campaign Report: GOP set to ask SCOTUS to limit mail-in voting Liberal super PAC launches ads targeting vulnerable GOP senators over SCOTUS fight Senate GOP faces pivotal moment on pick for Supreme Court MORE (Texas) said: “I need to check my thrift savings plan."

“It will come back,” he said.

--This report was updated at 12:27 p.m.