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Dow posts 5-day losing streak as trade tensions linger

CNBC logo CNBC 6/18/2018 Fred Imbert and Alexandra Gibbs
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Stocks ended lower Monday amid lingering trade tensions between the U.S. and China, the two largest economies in the world.

The Dow closed down 103 points, extending its losing streak to five days.

The S&P 500 lost 0.2 percent, with telecom lagging. The Nasdaq was little changed.

Shares of Boeing and Caterpillar fell. The two companies are seen as bellwethers for global trade concerns given their large amounts of overseas business.

On Friday, President Donald Trump announced that the U.S. would inflict tariffs that would impact up to $50 billion worth of Chinese goods. According to Washington, the action comes "in light of China's theft of intellectual property and technology and its other unfair trade practices."

Consequently, the move triggered China to retaliate, with Beijing announcing its own selection of duties on U.S. goods. The Chinese State Council's commission on tariffs and customs stated that a 25 percent tariff would occur in early July on $34 billion of U.S. products.

"There are many problems with tariffs. First and foremost is that they benefit far fewer people than they harm," said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note. "They are intended to boost employment in the industries that benefit from such protectionism, but they immediately raise prices of the protected goods for all consumers."

Still, stocks "may continue to zig and zag through the summer as the Jekyll and Hyde sides of Trump struggle to dominate his persona," he said. "On the one hand, there's Trump, the Deregulator and Tax-Cutter—his benevolent Dr. Jekyll persona. On the other is Trump, the Protectionist—his dark Mr. Hyde."

International markets also fell on Monday, with Asia closing lower and Europe slumping. The Stoxx 600 index, which includes a broad swath of European stocks, fell 1 percent.

Treasury yield declined as well as investors looked for safety. The benchmark 10-year yield slipped to 2.91 percent, while the short-term two-year yield declined to 2.545 percent.

In corporate news, shares of Disney fell 1.5 percent after being downgraded by Pivotal Research Group analyst Brian Wieser. In a note, Wieser said its battle for key Twenty-First Century Fox assets has placed the company in an unwinnable situation.


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