Dow closes down over 600 points after Trump rips China

WASHINGTON

The Dow Jones Industrial Average ended 623 points lower Friday after President Donald Trump told U.S. companies 'to immediately start looking for an alternative to China' amid an ongoing trade war with the world's second-largest economy.

Markets reacted negatively to Trump’s declaration, quickly erasing modest gains that came after Federal Reserve Chairman Jerome Powell appeared to leave the door open to additional interest rate cuts.

"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon," Trump tweeted in a flurry of posts.

In addition to the Dow 's losses, the S&P dipped more than 2.5% and the Nasdaq fell a full 3%.

In response to Trump's vow to impose 10% tariffs on $300 billion worth of Chinese imports beginning in September, China said Friday it would impose its own 5% and 10% tariffs on $75 billion worth of American goods.

Each country is set to impose their new import duties in two tranches: one beginning Sept. 1 and the other on Dec. 15.

That is on top of 25% tariffs that Trump imposed on $250 billion worth of Chinese goods which Beijing responded to with its own import penalties.

Adding to investors' concerns, the yield curve inverted again, with the interest rate on the benchmark 10-year Treasury note falling below the rate on two-year notes before reversing course later Friday. Such an inversion is widely seen as an indicator of a looming recession.