Fears of a trade war slammed stocks Thursday and could keep investors sidelined Friday, as the market looks set on a course to retest the February lows.

"I guess I wouldn't buy here. I want to understand more about what's going on, but for long term equity holders I would not use this as a reason to sell," said Jack Ablin, CIO at Cresset Wealth Advisors.

Ablin and others said the market could be first heading to test the 200-day moving average, which it did not break in the February selloff. On the S&P 500, that is currently 2,584, about 60 points from Thursday's close. The February low was another 50 points below that.

President Donald Trump announced Thursday that the U.S. would put tariffs on $50 billion of Chinese goods, and trade officials have recommended 10 high tech industries be specifically targeted.

The sell off also follows the Fed's latest rate hike Wednesday and new forecasts for more hikes next year and the following year.

"That's the current trend, but it doesn't take away from the fact that monetary policy is tightening and that typically doesn't end well," said Peter Boockvar, chief market analyst at Bleakley Financial Group. "Overall the headwinds grow, the deeper we get into monetary tightening." He also said the S&P could test the 200-day moving average sometime this quarter.

U.S. industries vulnerable to potential Chinese countermeasures were hit hard, as investors reacted to concerns the tariffs could lead to a trade war that would hurt corporate profits and the global economy.

Industrial stocks, for instance were down 3.3 percent, while Boeing was down more than 5 percent. Caterpillar was down 5.7 percent, in its worst decline since Brexit, when the British voted to leave the European Union.

Tech, weaker with Facebook, could also vulnerable to trade issues, and it lost 2.7 percent.

The Dow closed down 724 points, or nearly 3 percent at 23,957, and the lost 2.5 percent to 2,643. Nasdaq tumbled 2.4 percent to 7,166.

"I think at some point, either it's they reach some kind of deal or back away from it. It's hard to really know," said Ablin. "This isn't something we can measure fundamentally. The good news is it's self-inflicted. It's a contrived crisis. It's not a meteor coming from outer space. We can fix it just as easily as we broke it."

As stocks plunged, investors sought safety in Treasurys, and yields, which move opposite price, fell with the 10-year yield falling as low as 2.80 percent.

"There was $2.1 billion to sell on the bell. That's what took you to the lows. I would say 80 percent of this is the trade war, and then you add all the other incidentals, like the lawyer resigning," said Art Cashin, director of floor operations at UBS.

Stocks took a leg down around midday when headlines crossed that John Dowd, Trump's lead lawyer on the Russia investigation, had resigned.

"People are definitely losing faith in Trump. They're losing faith in him getting more done just in general," said Scott Redler, partner with T3Live.com. Redler said he expects the market could bounce Friday, but it may not end up higher as investors watch for more price discovery.

"People were hoping he would lighten up. Instead of $50 billion, he could have made it $30 billion or $40 billion, but he said it could even be more," said Redler.

Dan Clifton, head of policy research at Strategas, said the dollar impact of the tariffs would obviously be smaller than the $50 billion in goods they are targeting.

"From a dollar amount even if China responded proportionately, it's $30 billion in the global economy," he said. Clifton said the move could be typical of Trump, dramatic at first but then later softened as a negotiating tactic.

"Everything he does, he throws out a big thing and over time it gets watered down. He's trying to bring China to the negotiating table," said Clifton.

But the market is spooked, and the weakness of February has returned but with then market leader, tech, weakened by the Facebook data scandal.

"We had a 12 percent move off the highs going into those Feb. 9 lows with better leadership fro technology. Now the market feels worse, and we're still above [the lows.] Why wouldn't we test it?" said Redler.