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Stocks close lower as Dow extends losing streak to 8 days

CNBC logo CNBC 6/21/2018 Fred Imbert and Alexandra Gibbs
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Stocks fell Thursday as fears of an impending trade war between the U.S. and China dragged investor sentiment lower.

The Dow lost 195 points, posting an eight-day losing streak, its longest since March 2017. The S&P 500 declined 0.63 percent as energy shares fell.

The Nasdaq pulled back 0.88 percent, erasing earlier gains, led by declines in Amazon and Alphabet. Amazon shares fell after the Supreme Court ruled that states can require online shoppers to pay sales tax.

"The focus has been back on tariffs," said Michael Hans, CIO at Clarfeld Financial Advisors. "After a pretty substantial move higher, the major averages have been pretty range bound."

"This is a bit of a consolidation period after a sharp move higher," Hans said. 

The major indexes have posted mixed performances for the week thus far. The Nasdaq reached record highs and was up 0.3 percent through Wednesday's session while the Dow and S&P 500 are both down week to date. 

Simmering tensions between the U.S. and China on trade have kept stock gains in check this week, with the Trump administration threatening to slap tariffs on $200 billion worth in Chinese goods. China, meanwhile, said this thread violates previous negotiations and consensus reached between both countries. 

"While I suppose no one wins a trade war, the U.S. is currently 'losing less' in its current dispute with China if one uses the respective stock markets as a guide. While the S&P 500 largely stands in place and resides well above its correction bottom from earlier in the year, the Shanghai Composite has tumbled to a twenty-three month low," said Jeremy Klein, chief market strategist at FBN Securities. 

"This divergence should give Washington a bit more leverage in the negotiations and ultimately will lead to a workable solution for both sides," Klein said.

Auto makers were among the worst performers on Thursday, with General Motors, Ford Motor and Fiat Chrysler all falling at least 1.2 percent. The move lower followed a profit warning from German car manufacturer Daimler, which said its bottom line could be affected by the U.S.-China trade tensions. 

"We view this in the context of a strong global economic backdrop," said Bill Northey, senior vice president at U.S. Bank Wealth Management. "The risks to that have fallen in the policy realm, whether they're inflection points in monetary policy . . . trade or fiscal policy."

"These [risks] have all had their turn in the spotlight and now it's trade's turn," Northey said. "It's hard to discern whether these are negotiation volleys or something that may come to fruition at this point."

Wall Street also watched oil as OPEC and non-OPEC countries met to decide on the future of an agreement that currently limits production. U.S. crude fell 0.1 percent on Thursday to $65.66 per barrel.

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