NEW YORK (Reuters) – U.S. stocks fell on Friday on far weaker-than-expected growth in Chinese exports in a sign of a slowing global economy, but the SP 500 was on track for a fifth straight week of gains.
Data on Chinese trade and bank lending suggested pro-growth policies have been insufficient and more urgent government action may be needed to stabilize the economy.
“The data from China is concerning because the global economy is still the backdrop for the market. People are still very cautious because of the global growth concerns,” said Paul Brigandi, vice president of trading at Direxion Funds in New York.
The SP 500, which closed Thursday at a three-month high, fluctuated around 1,400 as the momentum of the recent rally has stalled. Investor sentiment had been buoyed by expectations that central banks would loosen monetary policy further.
The European Central Bank is expected to act soon to lower punishing borrowing costs for Spain and Italy as a way to stabilize the euro zone’s economy.
“After these numbers investors may want to see activity fairly quickly, especially from the ECB,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont, referring to the Chinese data.
The drop in Chinese exports included a 16 percent decline in shipments to Europe from a year ago.
The Dow Jones industrial average was down 12.90 points, or 0.10 percent, at 13,152.29. The Standard Poor’s 500 Index was down 1.68 points, or 0.12 percent, at 1,401.12. The Nasdaq Composite Index was down 5.58 points, or 0.18 percent, at 3,013.06.
Cyclical stock sectors, including financials, energy and consumer discretionary, fell.
The expectation of central bank action, however, may give support to equities as investors think twice about shorting the market on the possibility of any action.
Some economists said China’s central bank could move as early as this weekend to ease policy. It has reduced banks’ required reserve ratio in three steps since November to free up new lending and cut interest rates in June and July.
Yahoo shares fell 5.1 percent to $15.20 a day after the company said it may reconsider what it does with the cash it gets from a multibillion-dollar sale of half of its stake in Alibaba Group. Yahoo previously promised to return most of the cash to shareholders.
Manchester United shares were trading at their the initial public offering price of $14 after opening at $14.05. The stock priced well below its expected range on Thursday, valuing the British soccer club at $2.3 billion.
J.C. Penney shares rose the company said its second-quarter results showed a slowing in the flight of long-time customers reacting to a new pricing policy.
Research In Motion’s U.S.-traded shares rose 5 percent to $8.18 after Bloomberg reported IBM Corp has considered buying RIM’s enterprise division.
Fusion-io Inc shares jumped 29.2 percent to $27.15 after it projected late Thursday strong growth over the next year and the storage drive maker handily beat fourth-quarter profit estimates.
(Reporting by Anna Louie Sussman and Rodrigo Campos; Editing by Kenneth Barry)