The S&P 500 fell 39 points, or 1.6 percent, to 2,467. Even with the drop since late August, Nasdaq is almost 400 percent above its March 2009 low, with a total return of more than 456 percent. The Dow fell to its lowest since October 2017, while the Nasdaq sank to a 15-month low, toying with bear market territory for the second day in a row.
Markets were also unnerved by comments from President Donald Trump's trade adviser Peter Navarro who told the Nikkei newspaper that it would be "difficult" for the USA and China to reach a long lasting trade agreement that would end the tensions between the two.
The Nasdaq composite skidded 195.41 points, or 3 percent, to 6,332.99. With markets already shaky, any ongoing political dysfunction could lead to a dip in investor confidence, and hobble the economy's chances for continued growth.
S&P 500 (as of September 2018): -14.6%. The yield on the two-year Treasury rose to 2.87 percent from 2.65 percent, while the 10-year note rose to 2.80 percent from 2.77 percent. The Nasdaq added 18 points, or 0.2 percent, to 6,543.
Thursday saw another big stock market sell-off.
The major U.S. stocks indexes accelerated declines in the last hour of trading after White House trade adviser Peter Navarro said the United States and China might not reach a trade deal at the close of a 90-day negotiating window unless Beijing can agree to a profound overhaul of its economic policies. All of the major indexes have lost 16 to 26 percent from their highs this summer and fall.
Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, said investors felt Fed Chairman Jerome Powell came off as unconcerned about the state of the USA economy, despite deepening worries on Wall Street that growth could slow even more in 2019 and 2020. Google parent Alphabet was down 3 per cent, Amazon down almost 5 per cent, Facebook down more than 5 per cent, Netflix almost 5 per cent and Apple was in the red less than 2 per cent.More news: Solskjaer brightens Man United skies but gloom may quickly return
At the closing bell, the Dow Jones Industrial Average was down 1.5 per cent, about 350 points, at 23,324.10.
Companies that make and sell consumer goods were doing better than the rest of the market in early trading Friday. Heating oil fell 1 percent to $1.73 a gallon.
The dollar index rose 0.76 percent, with the euro down 0.74 percent to $1.1359.
Walgreens fell 2.8 percent and Conagra, a giant food maker, fell 7.4 percent. CNBC reports that companies in the S&P 500 have lost a total of $2.39 trillion in market cap in December.
The Dow Jones Industrial Average recorded its biggest weekly drop in percentage terms since 2008. The British FTSE 100 slipped 0.8 percent.
After early gains, bond prices headed lower.