But late Thursday, President Donald Trump ordered the U.S. Trade Representative to consider placing tariffs on $100 billion in duties on Chinese imports.
The S&P 500 index lost 37 points, or 1.4 per cent, to 2,625 as of 1:40 p.m.
"The market has vacillated between writing it off as just talk and assuming there could be a serious problem", said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. The FTSE 100 in Britain lost 0.2 percent.
"There was a hope that if he had a more dovish tone that that might be a counterbalance to the trade headwinds out there", said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
The Dow ended 572 points lower, closing at 23,932 for a 2.3 percent decline.
In a tweet Friday, Trump also criticized both China and the World Trade Organization, saying that the Chinese "get tremendous perks and advantages, especially over the U.S. Does anybody think this is fair".
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"The process itself seems to be quite chaotic", she said.
Kudlow, speaking to reporters shortly after the markets opened, said, "Now, we're not running a trade war". We were badly represented.
Analysts said the market also responded to Federal Reserve Chair Jerome Powell, who said that the US economy was growing and a turbulent stock market would not change the Fed's course to gradually raise interest rates.
Mnuchin said that a stock market correction was normal after such a long stretch of rising prices.
The stock market sold off sharply Friday as three-session win streaks for the major stock indexes came to an abrupt end.
The Dow average, which contains numerous multinational companies including industrial powerhouses Boeing and Caterpillar, has swung dramatically this week, with about 1,300 points separating its highest and lowest marks. While annual growth in average hourly earnings rose to 2.7 percent, it stayed below the 3 percent that economists estimate is needed to lift inflation toward the Federal Reserve's 2-percent target.
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"It shows a willingness to go to the mat on this and fight it out", he said.
Automakers Ford, General Motors, Fiat Chrysler and Tesla fell between 2 percent and 4 percent. He noted that the USA hasn't entered a full-blown trade war since 1930, and trade relationships were much different back then.
Still, she said businesses support the idea of making changes in America's trade relationship with China.
Craig Holke, investment strategy analyst for the Wells Fargo Investment Institute, said the market will continue to bounce around as investors worry about changes in trade that could slow down the global economy and company profits.
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.
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