Stocks Slide as China's Lower Growth Forecast Dings the Dow
NEW YORK ( TheStreet) -- U.S. stocks edged lower Monday, with global player Alcoa leading losses on the Dow Jones Industrial Average , after China said it would see a slower growth rate this year.
The Dow Jones Industrial Average closed down 14.8 points, or 0.1%, at 12,963 after paring losses through the afternoon. More than half of the index's 30 components posted losses, with Alcoa(AA) , Bank of America (BAC) , Caterpillar (CAT) and Intel(INTL) lagging the most.
"The action has the feel of increased caution, but everyone is aware of how consistently we have bounced back from poor opens," says James "Rev Shark" DePorre, founder and CEO of Shark Asset Management.
Scott Redler, chief strategic officer with T3Live.com, said that momentum traders are watching today's market carefully. If the S&P 500 spends a lot of time below its ten-day moving average of 1366, the index could test a lower range of 1352 to 1357, he explained.
Investors sold shares after China cut its economic growth target for the year and a gauge of business activity in the eurozone shrank. Chinese Premier Wen Jiabao slashed China's 2012 economic growth target to an eight-year low of 7.5%, citing high inflation and a tepid worldwide economic outlook. The outlook has significant impact on global growth as China has been among the fastest-growing economies in recent years, outstripping developed nations such as the U.S. and U.K.
Meanwhile, the private-sector HSBC China services index showed that the country's services sector progressed at its fastest pace in four months last month, but was markedly below its long-term trend. The private-sector HSBC China Services Purchasing Managers' Index rose to a seasonally adjusted 53.9 in February from 52.5 in January.
As for the eurozone, Markit Economics said that its composite purchasing managers' index for the continent fell to 49.3 in February from the earlier estimate of 49.7 and from the previous month's reading of 50.4. The below-50 reading indicates business activity contracted last month.
London's FTSE closed 0.6% lower, and Germany's DAX declined 0.8%. In Asia, Japan's Nikkei Average closed down 0.8%, while Hong Kong's Hang Seng index settled lower by 1.4%.
In U.S. economic news, data on factory orders and non-manufacturing activity came in better-than expected. January factory orders fell 1% according to the Census Bureau. A slide of 1.6% was expected by analysts surveyed by Thomson Reuters. Meanwhile December's originally reported 1.1% jump in factory orders was upwardly revised to a 1.4% gain.
The Institute for Supply Management's non-manufacturing index showed a much better than expected reading of 57.3 for February, up from 56.8 in January. Analysts polled by Thomson Reuters were forecasting a reading of 56 for last month.