The Dow Jones Industrial Average was down 2.3 per cent, or close to 600 points, at 24,364.52 around 1915 GMT.
The broad-based S&P 500 also dropped 2.3 per cent to 2,633.25, while the tech-rich Nasdaq Composite Index slumped 2.8 percent to 6,986.27.
The Huawei arrest dampened expectations that the US and China could quickly hash out a deal following a tariff ceasefire announced last weekend, Hogan added.
US President Donald Trump, only days after announcing a tariff ceasefire with Chinese leader Xi Jinping, said on Twitter that talks with China are "going very well!"
But investors were unnerved by White House advisor Peter Navarro, a hawk on China, who told CNN that Trump would "simply raise" tariffs on USD 200 billion worth of Chinese goods if talks fail.
Earlier, the Labor Department reported that the US economy added 155,000 jobs in November, below analyst expectations, even while unemployment held steady at 3.7 percent.
A survey of US chief executives released by the Business Roundtable showed a decline in confidence for the third straight quarter amid trade disputes, although the group said the index remained high by historical standards.
Most sectors were sharply lower on Wall Street, with financials, industrials and technology losing two percent or more.
Losses among energy shares were comparatively small after an OPEC deal boosted oil prices. But shares of Chevron, ExxonMobil and others that had been strongly positive earlier in the session, also slipped into the red amid the sell-off.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)