Stocks Broadly Lower On China, Greece Worries

By Salon Staff

Published March 5, 2012 3:09PM (EST)

NEW YORK (AP) — Worries over slowing economic growth in China and concern that a Greek bond exchange deal may not be going according to plan are pushing U.S. stocks lower Monday morning.

The Dow Jones industrial average fell 22 points to 12,955 a half hour after the opening bell, a loss of 0.2 percent.

Materials and energy stocks fell the most. Heavy equipment maker Caterpillar Inc. and Alcoa Inc. led the Dow average lower with losses of 1.2 percent.

Banks and energy stocks also fell. Wells Fargo fell 1.6 percent, and Morgan Stanley was off 1.7 percent. Alpha Natural Resources was down 3.5 percent.

Investors are particularly worried of the effect of a slowdown in China's economy on global growth. In recent years, a thriving Chinese economy has helped shore up the global economy in the wake of a banking crisis, a deep U.S. recession and debt problems in the Eurozone.

On Monday, China's premier Wen Jiabao lowered the economy's growth target to 7.5 percent from 8 percent, where it has stood for years.

Further weighing on the market are worries that there aren't enough private investors participating in Greece's bond swap, which could worsen the European debt crisis. Results are due late Thursday.

Greece and its bondholders have agreed on a debt swap that would reduce the face value of their holdings by 53.5 percent. Bondholders including banks, insurance companies, and investment funds are being offered new bonds that are worth less, have a longer time to be paid off and bear less interest. The debt reduction is one condition of Greece getting a second bailout package from other European countries and the International Monetary Fund.

In other trading, the S&P 500 index fell 3 points to 1,366. The Nasdaq composite index fell 6 points to 2,970.

Investors are also keeping a close watch on U.S. economic data due this week, culminating on Friday's U.S. jobs report.

A marked improvement in U.S. economic data in recent months have helped sentiment in the markets. The main U.S. stock indexes have been trading at their highest levels since before the collapse of investment bank Lehman Brothers in 2008.

Salon Staff

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