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NEW YORK—Two signs of trouble elsewhere in the world, slowing economic growth in China and a possible hitch in a deal to get Greece the bailout money it needs to avoid a default, pushed U.S. stocks lower Monday.
The Dow Jones industrial average fell 61 points to 12,916 just after noon EST. The Dow closed above 13,000 last week for the first time since May 2008. The Standard Poor’s 500 dropped eight points to 1,361. The Nasdaq composite index fell 26 to 2,949.
China’s premier, Wen Jiabao, lowered China’s target rate for economic growth to 7.5 percent from 8 percent, where it has stood for years. Growth in China has shored up the global economy since the financial crisis in 2008.
The lower projection for Chinese
growth hurt stocks of large U.S. materials companies that depend on China for profits. Caterpillar, which makes heavy equipment, fell 2.4 percent. Alcoa, the aluminum maker, fell 3.5 percent.
Materials stocks in the SP 500 fell almost 2 percent, easily the worst-performing industry group. Consumer staples companies climbed 0.3 percent, the only group in the 10 SP 500 categories to gain.
Still, “China is still a driver of global growth, even at its slightly reduced pace,” said Richard Cripps, chief market strategist at Stifel Nicolaus. “The growth rate is still far better than the U.S. and Europe.”
Further weighing on the market were worries that not enough private investors will participate in a bond swap in
Greece and accept bonds of lower face value and lower returns.
Trying to reassure world markets, a group representing the private investors said Monday that a dozen banks, insurers and investment funds that hold Greek government bonds will participate. The deadline to participate is Thursday night.
Greece needs private investors to sign on before it gets a second international bailout worth euro130 billion, or $172 billion. Without the bailout, it could default on its debt later
this month and send a shock through the world financial system.
In a sign that not all is well in the U.S. economy, either, the Commerce Department said factory orders fell 1 percent in January, the largest decline in a year and three months. Businesses sharply reduced orders for machinery after a tax credit expired.
Stock market losses were contained by some positive news from the U.S. economy. Service companies expanded in February at the fastest pace in a year, helped by a rise in orders and job growth.
The Institute for Supply Management said Monday that its index of non-manufacturing activity rose to 57.3, up from 56.8 in January and the third straight increase. Any reading above 50 indicates expansion.
recent months, markets have been lifted by signs of improvement in the U.S. economy. U.S. stock indexes have been trading at their highest levels since before the collapse of the Lehman Brothers investment bank in 2008.
Among other stocks making big moves:
— American International Group was up 3.5 percent. AIG will raise $6 billion by selling part of its stake in an Asian insurance company and pay down some of its debt to the U.S. government from a bailout during the financial crisis. AIG owed $50 billion at the end of 2011.
— Computer Sciences Corp. was up close to 2 percent after it signed a letter with the British government to deliver health care services there.
— WPX Energy Inc. was up 3.6
percent after reporting a 200 percent increase in oil production volumes and higher-than-expected natural gas production.