By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks looked set on Wednesday to snap a four-day winning streak after Washington's threat to impose tariffs on an additional $200 billion worth of Chinese goods fanned trade war fears, while a sharp drop in oil prices hit energy.
The materials index <.SPLRCM>, down 1.7 percent, was another big negative influence among sectors, with Freeport-McMoRan
"The tone of today didn't start off well due to tariff fears," said Michael Antonelli, managing director, institutional sales trading, at Robert W. Baird in Milwaukee.
But, he said, "the drop in oil is driving this extra drop lower."
The S&P 500 energy index <.SPNY> fell 2.1 percent, leading sector declines. U.S. crude oil futures settled down 5 percent on the trade dispute escalation and as expectations of growing supplies increased on news that Libya would reopen ports.
The Dow Jones Industrial Average <.DJI> fell 186.39 points, or 0.75 percent, to 24,733.27, the S&P 500 <.SPX> lost 16.59 points, or 0.59 percent, to 2,777.25 and the Nasdaq Composite <.IXIC> dropped 32.84 points, or 0.42 percent, to 7,726.35.
The drop is not as steep as what was seen in late March and early April when the escalating trade rhetoric between China and the United States led to the S&P falling more than 2 percent on four occasions.
The market slide has been contained by the speculation that the Trump administration could change its mind by the end of August, when the tariffs are due to come into effect, some strategists said.
However, Morgan Stanley told clients that the earnings season could trigger risk aversion among investors if companies start warning of slower growth due to trade tariffs.
The utilities sector <.SPLRCU> was the only one in positive territory, with a 0.8 percent gain.
Declining issues outnumbered advancing ones on the NYSE by a 2.31-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 59 new highs and 43 new lows.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)