By Chris Dieterich And Saumya Vaishampayan
U.S. stocks fell on Monday, with the Dow Jones Industrial
Average stepping back from an all-time high, as uncertainty about
China's growth injected caution into global markets.
The Dow slid 63 points, or 0.4%, to 17216 in midmorning trading.
The S&P 500 shed 14 points, or 0.7%, to 1996 and the Nasdaq
Composite Index declined 53 points, or 1.2%, to 4526.
The Russell 2000 index of small companies fell most, dropping
1.4%.
Stocks' cautious tone began overnight, after China's financial
minister said that the world's second-largest economy faces
pressure, but that major changes to its stimulus aren't likely.
That statement damped hopes for more aggressive policies.
Yousef Abbasi, a market strategist at brokerage JonesTrading
Institutional Services, said that volumes were light, but that
selling in shares of emerging markets helped add to the market's
downbeat mood. The iShares MSCI Emerging Markets exchange-traded
fund dropped 1.4% to a 3 1/2 -month low.
Mr. Abbasi said that short-term traders were reshuffling
positions after last week's full slate that included new
information from the Federal Reserve, a vote on Scottish
independence and the trading debut for Chinese e-commerce company
Alibaba Group. The Dow rose 1.7% for the week and closed at its
18th record high of 2014.
U.S. stock indexes "got through an important week unscathed,"
Mr. Abbasi said. "Today there is a lot of reflection, and people
are digesting last week's moves," he said, noting a preference on
the part of traders in recent days for shares of the largest U.S.
companies.
Concern about Chinese growth has ramped up of late after data
showed the country's industrial output growth slowed to its lowest
level since the 2008 financial crisis. Due on Tuesday is an initial
reading on September's Chinese manufacturing activity from
HSBC.
Hong Kong's Hang Seng Index dropped 1.4%, while Japan's Nikkei
fell 0.9%. In Europe, the Stoxx Europe 600 index fell 0.4% and the
U.K.'s FTSE 100 declined 0.8%.
In U.S. trading, Alibaba Group declined 3.4% on Monday after
shares soared 38% in the company's initial public offering on
Friday.
Apple slipped 0.1% after the company announced that it sold more
than 10 million of its new iPhone 6 and iPhone 6 Plus devices over
their first weekend, topping last year's total.
Many investors say the outlook for stocks remains positive
despite Monday's soft trading. Stocks gained last week as the
Federal Reserve reaffirmed its commitment to keeping interest rates
low as the economy continues to recover.
"From an economic perspective, things are shaping up pretty
well," said Dan McMahon, director of equity trading at Raymond
James.
Stocks continued lower on Monday after a reading on August
existing home sales showed a monthly decline for the first time in
five months. Sales of previously owned homes declined 1.8% from
July to rate of 5.05 million. Economists surveyed by The Wall
Street Journal expected an annual rate of 5.2 million.
Demand for bonds pressured the yield on benchmark 10-year
Treasury notes to 2.567% from 2.589% late on Friday. Treasury
yields move inversely with prices.
In commodity markets, crude-oil futures declined 0.9% to $90.84
a barrel. Gold futures fell 0.2% to $1,214.10 a troy ounce.
In deal news, German pharmaceutical company Merck KGaA, which
isn't affiliated with U.S. company Merck & Co., said Monday it
agreed to acquire Sigma-Aldrich Corp. for $17 billion. Shares of
Sigma-Aldrich rose 34%.
Germany's Siemens AG said it agreed to acquire Dresser-Rand
Group Inc., a U.S. oil-equipment maker, in a deal worth $7.6
billion, or $83 a share in cash. Shares of Dresser-Rand Group rose
2.6%.
EMC Corp. is considering options that could include a merger,
The Wall Street Journal reported. EMC is under pressure to break up
from hedge fund Elliott Management Corp. EMC shares added 1.3%.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com and
Chris Dieterich at chris.dieterich@wsj.com