Markets End Week With Deep Losses as Huawei CFO Is Charged With Fraud

Photo Credit: Maxim Shipenkov/EPA/Shutterstock
December 7, 2018
Updated 1mo ago

By Chloe Aiello

The markets plunged again on Friday, capping off a wild week on Wall Street. Fears of slowing global growth, exacerbated by U.S.-China tensions, and a weaker-than-anticipated jobs report contributed to the losses.

The tech-heavy Cheddar 50 Index, which measures the performance of Cheddar's 50 top companies ー from Apple to GM ー fell 4 percent on Friday. Every stock in the index was down, with Lululemon ($LULU) leading the declines. Shares were down more than 13 percent after reporting a disappointing outlook for its all-important holiday quarter. Stitch Fix ($SFIX), Netflix ($NFLX), and Roku ($ROKU) also dragged on the index.

Major indexes were also down. The Dow Industrials lost an additional 558 points or 2.2 percent ー putting it on track for its worst week since March. The S&P 500 fell 2.3 percent and the Nasdaq dropped 3 percent.

While a jobs report early Friday morning initially sent stocks higher on optimism that the Fed would temper interest rate hikes to combat slower growth, markets changed course about an hour after the open and were sharply lower for the rest of the day.

Details also emerged Friday about the arrest of Meng Wanzhou, the CFO of Chinese tech giant Huawei. During a bail hearing on Friday, it was revealed that the executive and daughter of the company founder has been charged with fraud for breaching U.S. sanctions to do business with Iran. The U.S. alleges that Huawei used a firm called Skycom to do business with Iran, Bloomberg reported and that banking institutions were forced into the transactions, inviting the risk of fines. Meng faces up to 30 years in prison for each charge.

Meng was arrested in Canada at the request of the U.S. Department of Justice on Dec. 1, the same day that President Trump met with China's Xi Jinping to continue trade negotiations. It is not clear whether or not Trump was aware of the arrest at the time.

Friday's drop capped a roller-coaster week that started with a sharp rise on Monday after it appeared the U.S. and China had come to an agreement on tariffs and then saw steep declines on Tuesday due to worries about a flattening yield curve. Markets were closed Wednesday for late President George H.W. Bush's funeral. But news of Meng's arrest, which broke late Wednesday, sent markets into a tailspin early Thursday, with the Dow dropping nearly 800 points before mostly paring its losses, following comments from the Fed.