New York CNN Business  — 

The Dow fell more than 100 points Thursday as the latest back-and-forth in the US-China trade spat weighed on global markets.

The Dow closed down 0.5%, or 139 points, though the index was down more than 400 points earlier in the day. The S&P 500 (SPX) and the Nasdaq finished 0.3% and 0.4% lower, respectively — the fourth straight day those two have ended in the red.

It’s crunch time on the trade. Additional US tariffs on Chinese goods are set to take effect after midnight.

During a rally in Florida late Wednesday, President Donald Trump said he decided to raise tariffs on some $200 billion worth of imports from China because Beijing “broke the deal.” He threatened to up existing tariffs from 10% to 25% in a tweet on Sunday.

China’s Commerce Ministry said it considered countermeasures to the increased tariffs. Meanwhile, Chinese Vice Premier Liu He arrived in Washington, which market participants took as a glimmer of hope for a deal to be struck between the world’s two largest economies.

On Thursday afternoon, Trump spurred some optimism after saying he had received a “beautiful” letter from Chinese President Xi Jinping. He added the parties were “getting very close” to a new trade pact.

“It is looking like a deal with China won’t happen this week, which has opened the door to increased uncertainty and a sell-first-and-ask-questions-later mentality,” said Ryan Detrick, Senior Market Strategist for LPL Financial. “Even if tariffs increase tomorrow, there is still time for a resolution and minimal impact on the global economy. But the clock is ticking and both sides still have some major differences to solve.”

Ongoing negotiations, additional tariffs from the US and retaliation from China could prove to be a prolonged headwind for US companies, said ratings agency Fitch on Thursday. Tech and industrials businesses were the most vulnerable to retaliatory actions, Fitch said, pointing at the likes of Boeing (BA), Intel (INTC) and Texas Instruments (TXN) as examples.

The additional tariffs and possible retaliation “will weaken consumer and business confidence in the context of an already slowing global economy,” said Elena Duggar, assistant managing director at ratings agency Moody’s. Besides tech and industrials, retail and wholesale companies that source finished goods from China could also suffer, Duggar said.

A trade war could knock global supply chains, the Chinese economy and also the global economy.

Traders have taken Trump’s latest comments “as a sign that the relationship between Washington DC and Beijing is going to get worse,” said David Madden, market analyst at CMC Markets. “Trade discussions between the two sides will continue today, but investors aren’t holding out much hope. Mr. Trump is not a man to back down, and it looks likely that this trade spat will move to the next level.”

Right now, eleventh-hour talks are set to go ahead, so the negotiations are not entirely dead in the water. Rabobank strategists suggested in a note that investors should try to look “through the headlines to see the forest from the trade war trees.”

“First and foremost, the negotiations are still going ahead today and have not been canceled, in spite of the exchange of threats,” they wrote.

Even so, markets around the world were tumultuous. European stocks traded in the red. In Asia, the Shanghai Composite Index (SHCOMP) closed 1.5% lower, while Hong Kong’s Hang Seng (HSI) finished down 2.4%.

It’s been a wild week. On Wednesday, stocks staged a recovery from the fear-inspired selloff and the Dow finished in the green, albeit just barely. On Tuesday, US stocks recorded their worst one-day drop since January.