The Dow Jones Industrial Average fell 574 points, or 2.3%, to 23,930.
US President Trump said he is considering tariffs on an additional 100 billion dollars-worth of Chinese imports, and China has warned that it is ready to retaliate. "The number of advancing stocks on the NYSE are outnumbering decliners 2,347 to 486, or by an 5-to-1 margin".
The Cboe Volatility Index, the most widely followed barometer of expected near-term volatility for the S&P 500, closed down 1.12 points at 18.94, its lowest close in more than two weeks.
This story is developing and will be updated...
Wall Street stocks finished sharply lower on Friday (Apr 6) after escalating threats in the US-China trade spat deepened fears of an all-out trade war. Oil prices fell nearly 5 percent this week as investors wondered if an increase in trade tensions will reduce demand for oil by slowing down the global economy. "The tariff threats, even if only intended as bargaining tools, will be hard to back down from if talks fail to deliver results", Capital Economics' Julian Evans-Pritchard wrote in a research note Friday. "In the meantime, there will be ongoing noise around the issue", and financial markets will remain volatile".
In light of China's "unfair retaliation" against earlier USA trade actions, Trump upped the ante by ordering United States officials to identify extra tariffs, escalating a high stakes tit-for-tat confrontation.
U.S. stocks slumped and Treasuries rose as investors assessed the latest threat to the global trade order and a disappointing jobs report. Beijing fired back hours later by threatening tariffs on $50 billion worth of USA goods, including cars, planes and soybeans.
Responding on Friday, China's Ministry of Commerce said it would immediately retaliate if the U.S. imposed the sanctions.
That has investors anxious, because the U.S. Federal Reserve continues to hike interest rates.
United States stocks were in the red throughout the session but losses deepened in the afternoon following an interview with Treasury Secretary Steven Mnuchin and a speech by Federal Reserve Chairman Jerome Powell.
With administration officials sounding conciliatory one day and more hostile the next and the president always quick to fire off another tweet, investors simply don't know what the USA wants to achieve, said Katie Nixon, chief investment officer for Northern Trust Wealth Management.
The U.S. economy added just 103,000 new jobs in March (http://www.marketwatch.com/story/us-adds-103000-jobs-in-march-in-smallest-gain-since-last-fall-2018-04-06) to mark the smallest increase since last fall and well below the 170,000 forecast by economists polled by MarketWatch. In February, an unexpected jump in wage growth set off inflation alarm bells and caused stocks to plunge.
The Fed is on track to raise rates three times this year, but it could speed up the increases to keep the economy from overheating. "Now we only have one issue to deal with, and that's trade".
The yield on the 10-year US Treasury note, which has been steadily climbing as investors' inflation expectations rise, dipped slightly to 2.78% after the jobs report.