Market slips as China revises growth downward

NEW YORK (Reuters) – 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 China trimmed its growth target for 2012.

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 zone’s debt crisis and the belief that China will avoid a hard landing in its current economic cycle.

China, the world’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 economy’s reliance on external spending and foreign capital.

“That spooked everybody this morning. It started over in Asia, flowed right to Europe and flowed right over here,” said Ken Polcari, managing director at ICAP Equities in New York.

“The 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.”

Materials shares, sensitive to signs of slowing in China’s commodity-hungry economy, dropped and were the biggest drag on Wall Street. The S&P materials sector index (REU:GSPMI) fell 1.6 percent, with Freeport McMoRan Copper & Gold Inc (NYS:FCX) off 3.8 percent at $40.45.

The Dow Jones industrial average (DJI:DJI) shed 14.76 points, or 0.11 percent, to 12,962.81 at the close. The Standard & Poor’s 500 Index (MXP:SPX) dipped 5.30 points, or 0.39 percent, to 1,364.33. The Nasdaq Composite Index (NAS:COMP) 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 – a line it has held for the last 50 sessions in an impressive run.