The Dow fell 70.87 points, or 0.3%, to 26,820.25. The S&P 500 slid 0.5% to close at 2961.79. The Nasdaq Composite dropped 1.1% to 7939.63. The S&P 500 ended the week down 1%, its second straight weekly decline.
U.S. equity markets reversed early gains and sank after reports that the White House is now considering limits to U.S. investment in China. Stocks with exposure to China including Boeing and Apple fell following the news of the administration's considerations, which if pursued could endanger billions of dollars in investments tied to major indexes and escalate the trade war. Chinese stocks trading on U.S. exchanges dropped on fears they could be delisted, with shares of Alibaba losing 5%.
A person familiar with the deliberations told CNBC that a block of all U.S. financial investment in China was among the options under review, though cautioned that any such moves are in the early stages of discussion.
Chipmaker stocks sank on the week's final day of trading and contributed to a slump in the broader technology industry. Nvidia and Applied Materials both fell more than 3% while Micron, which announced weaker guidance on Thursday, dove 11%. Friday was Micron's worst day on Wall Street since June 2015.
With only one more trading day left in September, Wall Street will await more news on trade. Read more about what's ahead here.