New York - U.S. stocks fell, sending the Standard & Poor's 500 Index to a nine-week low, after Chinese equities entered a bear market amid concern a cash crunch will hurt growth and as investors weighed the impact of a possible reduction in the Federal Reserve's monetary stimulus.
Bank of America and Citigroup slid 3.1 percent as banks led losses. Apple fell 2.7 percent after Jefferies & Co. lowered the stock's price target amid a glut of unsold iPhones. Allergan tumbled 12 percent amid analyst downgrades. Vanguard Health Systems surged 67 percent after agreeing to be bought by Tenet Healthcare for about $1.8 billion.
The S&P 500 fell 1.2 percent to 1,573.09 at 4 p.m. in New York, the lowest since April 22. The Dow Jones Industrial Average slipped 139.84 points, or 0.9 percent, to 14,659.56. About 8.5 billion shares traded hands on U.S. exchanges, about 32 percent above the three-month average.
"Domestically, there's continued improvement in the economic data, but the broader macro fed policy issues are overshadowing that especially as we do not have much earnings visibility at this point and the international issues are outweighing the domestic improvements," Eric Teal, chief investment officer at First Citizens BancShares, which manages $5 billion in Raleigh, N.C., said in a phone interview. "People might be lightening up equity positions given the strong year-over-year gains."
The S&P 500 sank 2.1 percent last week, the most since April 19, after Fed Chairman Ben Bernanke said the bank may start paring stimulus measures as soon as September if the economy improves in line with its forecasts. The stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging 133 percent from its March 2009 low.
Global stocks fell on Monday, as Chinese equities entered a bear market as the CSI 300 Index of China's biggest companies tumbled 6.3 percent, the most since August 2009. The plunge took its loss from this year's peak to more than 20 percent. China's benchmark money-market rates last week climbed to a record as the central bank refrained from using open-market operations to ease a cash squeeze.
The S&P 500 followed global stocks lower, with the benchmark gauge slipping briefly below its 2007 closing high of 1,565.15. The index surpassed that peak in March, recovering all its losses from the financial crisis.