Back to the drawing board regarding the trade war with China. The major averages plunged on Friday after President Donald Trump ordered that U.S. manufacturers find alternatives to their operations in China. The Dow Jones Industrial Average closed down 623 points lower, or 2.4% at 25,628. The S&P 500 slid 2.6% to close at 2,847. The Nasdaq Composite dropped 3% to end the day at 7,751. The major indexes also posted weekly losses for the fourth straight time. The Dow dropped about 1% this week while the S&P 500 pulled back 1.4%. The Nasdaq lost 1.8%. The losses brought the Dow's decline for August to more than 4%.

The day started with investors looking forward to Fed Chair Powell's speech from Jackson Hole, Wyoming. Attention quickly shifted to trade, however, after China announced tariffs on $75 billion of goods imported from the U.S on Sept. 1 and Dec. 15, which are the same dates the U.S. has planned for its tariffs on China. The tariff rate will range from 5-10%, including a separate 5-25% on autos and auto parts starting Dec. 15.

Modest selling ensued, but stocks quickly recouped losses after Mr. Powell reiterated comments that upheld the market's view for further economic stimulus. The day had barely begun, though, and President Trump took to Twitter to lash out against both the Fed Chair and China. Stocks fell noticeably on the president's declaration that companies find alternatives to China.

A steady broad-based retreat transpired during the day amid worries that escalated trade tensions will exacerbate slowing global growth and, by extension, affect corporate earnings. All 11 S&P 500 sectors finished in negative territory with the two weakest sectors, energy and information technology down over 3.%.  

Shares of Apple fell 4.6% and other trade-sensitive areas like the Philadelphia Semiconductor Index declined 4.4% and the Dow Jones Transportation Average down 3.3%. Shares of Foot Locker plunged nearly 20% after the company missed top and bottom-line estimates.

The 2-yr yield dropped seven basis points to 1.53%, and the 10-yr yield dropped eight basis points to 1.53%. The U.S. Dollar Index fell 0.5% to 97.73. WTI crude fell 2.0%, or $1.12, to $54.16/bbl.