Wall Street slips as China trims growth target
(Reuters) â€“ Stocks fell on Monday for the second straight session and the third in the last four trading days, led lower by basic materials shares after Chinatrimmed its growth target for 2012.
Traders work on the floor of the New York Stock Exchange February 24, 2012. Credit: Reuters/Brendan McDermid
The S&P 500 index opened lower and data showing the U.S. services sector expanded in February at its fastest pace in a year did little to stem the decline.
The benchmark S&P 500 is up 8.5 percent so far this year on investor expectations for a recovery in the U.S. economy, a containment of the euro zoneâ€™s debt crisis and the belief that China will avoid a hard landing in its current economic cycle.
China, the worldâ€™s second-largest economy, lowered its 2012 growth target to an eight-year low of 7.5 percent and made expanding consumer demand its top priority, as Beijing looks to shrink the economyâ€™s reliance on external spending and foreign capital.
â€œThat spooked everybody this morning. It started over in Asia, flowed right to Europe and flowed right over here,â€ said Ken Polcari, managing director at ICAP Equities in New York.
â€œThe fact is they are guiding a little bit lower to control their inflation. It is not necessarily the end of the world, but it gave people a reason to take some money off the table.â€
Materials shares, sensitive to signs of slowing in Chinaâ€™s commodity-hungry economy, dropped and were the biggest drag on Wall Street. The S&P materials sector index .GSPM fell 1.6 percent, with Freeport McMoRan Copper & Gold Inc (FCX.N) off 3.8 percent at $40.45.
The Dow Jones industrial average .DJI shed 14.76 points, or 0.11 percent, to 12,962.81 at the close. The Standard & Poorâ€™s 500 Index .SPX dipped 5.30 points, or 0.39 percent, to 1,364.33. The Nasdaq Composite Index .IXIC lost 25.71 points, or 0.86 percent, to close at 2,950.48.
During the session, the S&P 500 briefly dipped below its 14-day moving average â€“ a line it has held for the last 50 sessions in an impressive run.
The Nasdaq registered the biggest decline among the three major U.S. stock indexes as Apple Inc (AAPL.O) dropped as much as 3.5 percent to a session low at $526 on heavy volume. By the close, Apple had retraced some of that loss, down 2.2 percent at $533.16. The company is expected to debut its new iPad this week.
â€œThere is talk about iPad sales slowing down and all that â€¦ itâ€™s done nothing but go straight up with no correction at all. So any whiff of the slightest miss or negative news is going to take money right out of it, and thatâ€™s what you saw today,â€ Polcari said.
The S&P technology sector index .GSPT lost 1 percent.
Further weighing on investor sentiment in the early portion of trading, Greece warned it was ready to enforce losses on its private-sector creditors, although major Greek bondholders later
voiced their support for the deal.
The continued uncertainty around the Greek deal along with data showing a slowdown in business activity in various euro-zone countries heightened recession worries for the region and pushed European equities lower. .EU
Alpha Natural Resources (ANR.N) shares dropped 6 percent to $16.35 and Arch Coal (ACI.N) slid 5.4 percent to $12.20 as lower natural gas prices added to growth concern in China, pressuring coal minersâ€™ stocks.
U.S. steelmakersâ€™ shares were also hit by the news China was lowering its economic growth outlook.
AK Steel (AKS.N) stock fell 6.1 percent to $7.29, U.S. Steel (X.N) dropped 4.7 percent to $$26.21 and Nucor (NUE.N) slipped 2.4 percent to $42.52.
â€œItâ€™s all about China,â€ said analyst Charles Bradford of Bradford Research in New York, who noted that last year China had expected 7 percent growth and it actually came in at 9.8 percent.
â€œThe fear is that if Chinaâ€™s domestic market is not doing so well, it will have surplus steel to export,â€ he said.
Volume was light with about 6.08 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 6.9 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of 3 to 2, while on the Nasdaq, nearly seven stocks fell for every six that rose.
(Reporting By Chuck Mikolajczak; Additional reporting by Steve James; Editing by Jan Paschal)
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