NEW YORK (AP) — The worldwide sell-off in financial markets came back around to the United States Friday, and stock indexes fell in morning trading as traders continue to take cover following President Trump’s latest escalation in his trade war with China.

The S&P 500’s drop of 0.9%, as of 10:13 a.m. Eastern Time, was more modest than for indexes in Europe and Asia, many of which lost more than 2%. But it adds to steeper losses from the day before, when Trump announced 10% tariffs on all the Chinese imports that haven’t already been hit with tariffs of 25%.

The fear is that the escalating trade war will drag the U.S. economy into recession for the first time in a decade. China on Friday threatened “necessary countermeasures” if the United States goes ahead with the planned tariffs.

The U.S. economy is still growing, but weakness abroad and the trade war are slowing it. Friday’s U.S. jobs report underscored that, showing that hiring dropped to 164,000 in July. The unemployment rate remained at 3.7%, close to a half-century low.

Many traders are hoping the Federal Reserve will come to the market’s rescue and cut interest rates repeatedly to support the economy. Traders see low rates as steroids for stocks and other risky investments because they make bonds less attractive in comparison.

The Fed cut rates on Wednesday for the first time in a decade, and Chairman Jerome Powell cited “trade policy uncertainty” as a major reason for it. But he stopped short of promising a long cycle of rate cuts, which left investors disappointed and Trump tweeting that “as usual, Powell let us down.”

Investors now say there’s nearly a 90% probability that the Fed will cut rates again at its next meeting in September, up from a roughly 50% probability Wednesday afternoon. Friday’s jobs report was close to economists’ expectations, and analysts said that it shouldn’t alter the Fed’s path much on its own.

“The jobs report looked good today, but a rapidly shifting context and growing uncertainties cloud its meaning,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.

The Dow Jones Industrial Average was down 217 points, or 0.8%, at 26,366, and the Nasdaq composite fell 1.3%. The S&P 500 was on track for its fifth straight loss and its worst weekly performance of the year.

Treasury yields were mixed, and the 10-year yield fell to 1.88% from 1.89% late Thursday. It’s close to its lowest point since Trump’s 2016 election. The two-year yield rose to 1.73% from 1.71%.

Markets abroad sold off more heavily in their first opportunity to trade following Trump’s tariff tweet. In Europe, France’s CAC 40 lost 3.1%, and Germany’s DAX dropped 2.8%. The FTSE 100 in London fell 2.1%. In Asia, Japan’s Nikkei 225 index sank 2.1%, the Hang Seng in Hong Kong lost 2.3% and South Korea’s Kospi dropped 1%.

Benchmark U.S. crude oil rose $1.77, or 3.3%, to $55.72 to recover about a third of its plunge from the day before. Brent crude, the international standard, gained $2.14 to $62.64.

Gold continued to climb as investors looked for safety. It rose $18.20, or 1.7%, to $1,450.60 per ounce.