US President Donald Trump is seen during the presentation ceremony for the Presidential Medal of Freedom to Celtics basketball legend Bob Cousy in the Oval Office of the White House in Washington, DC on August 22, 2019. (Photo by MANDEL NGAN / AFP)        (Photo credit should read MANDEL NGAN/AFP/Getty Images)
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(CNN Business) —  

Stocks finished a volatile trading day sharply in the red Friday, after a selloff driven by President Donald Trump’s response to new retaliatory tariffs from China and Fed policy.

The Dow (INDU) dropped more than 700 points at its worst, closing down 2.4%, or 623 points. The S&P 500 (SPX) and the Nasdaq Composite (COMP) finished 2.6% and 3% lower, respectively.

It was the worst day for stocks since August 14. All three indexes had been on track to break a three-week long losing streak at the start of the day, but the selloff didn’t allow for that. It was the fourth down-week in a row for all three, according to Refintiv.

Prior to the market open, China announced new retaliatory tariffs that will impact $75 billion worth of US goods and range from 5% to 10%. The tariffs will also include US oil imports. On top of that, China will resume its 25% tariffs on US car imports. The move was the latest escalation in the ongoing US-China trade war.

In response, President Trump tweeted he “will be responding to China’s tariffs this afternoon.”

“We don’t need China and, frankly, would be far better off without them,” he said. He also “ordered” American companies “to immediately start looking for an alternative to China.”

Besides stocks, other financial assets also dropped.

US oil futures settled down 2.1% at $54.17 a barrel, according to CME, on the back of the threatened tariffs on oil imports.

The US dollar, measured by the ICE U.S. Dollar Index, dropped 0.5%, and the yield on the 10-year US Treasury rate fell to 1.53%. The yield curve again inverted Friday, meaning that shorter-dated 2-year bonds yield more than longer-dated 10-year bonds. This has been a historic recession indicato