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Trade tensions with China dampen U.S. stocks

Stocks fell on Wall Street Friday amid investor concerns over whether the U.S. and China can settle their dispute over trade. Negotiations were suspended with no resolution last Friday after the U.S. more than doubled tariffs on $200 billion worth of Chinese imports to 25% from 10% and China imposed countertariffs.

"The trade issue could still get worse before it gets better, but our view remains that a deal will ultimately be reached to resolve the issue given the economic (and in Trump's case political) damage that would be caused if a deal is not reached," Shane Oliver of AMP Capital said in a commentary.

Even a short-term trade dispute could dampen consumer spending significantly, BoFA Merrill Lynch Global Research said in a research note. 

Technology and industrial companies dropped the most as the S&P 500 heads for a second straight weekly decline. That hasn't happened so far in a year where the index is up about 14%.

Deere shares dropped 4.6% after the farm equipment maker's second quarter earnings missed Wall Street expectations. The agricultural machinery company lowered its outlook for year based on the trade war and a weakened agriculture sector.

The S&P 500 index fell 0.6%, to 2,858. The Dow also lost 0.6%, falling to 25,708. The Nasdaq dropped 0.7%, to 7,838.

The yield on the 10 year Treasury fell to 2.37% from 2.40% Thursday.