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 77 points, or 0.4%, to 17203 in midday trading. The
S&P 500 shed 17 points, or 0.8%, to 1994 and the Nasdaq
Composite Index declined 59 points, or 1.3%, to 4519.
The Russell 2000 index of small companies fell most, dropping
1.6%.
Stocks' cautious tone began overnight, after China's financial
minister said that major changes to the country's economic stimulus
efforts aren't likely even as the world's second-largest economy
grapples with growth concerns. That statement damped hopes for more
aggressive policies, and also pushed Treasurys higher, while
driving copper and nickel lower.
The yield on benchmark 10-year Treasury notes to 2.549% from
2.589% late on Friday. Treasury yields fall when prices rise.
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 1.6% 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 a rate
decision by Federal Reserve officials, a vote on Scottish
independence and the trading debut of Chinese e-commerce company
Alibaba Group. The Dow rose 1.7% for the week and closed Friday 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 in recent weeks 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 0.5% and the
U.K.'s FTSE 100 declined 0.9%.
In U.S. trading, Alibaba Group declined 4.6% on Monday after
shares soared 38% in the company's initial public offering on
Friday.
Apple added 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.
Traders have been building protective positions in recent weeks
as stocks have hit fresh all-time highs, said Stacey Gilbert, head
of derivatives strategy at Susquehanna Financial Group. She said
that prices for put options on the S&P 500 index, which are
used to protect against stock-market declines, are have pulled well
ahead of those on bullish options.
"Investors are certainly protective as we head into the end of
the year, " Ms. Gilbert said.
Still, many investors say that their outlook for stocks remains
positive after a 3.9% advance for the Dow in 2014. The U.S. economy
has shown improvement, corporate profits are accelerating and the
Fed last week reaffirmed its commitment to keep interest rates
low.
"From an economic perspective, things are shaping up pretty
well," said Dan McMahon, director of equity trading at Raymond
James.
On Monday, 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, less than expected.
In commodity markets, crude-oil futures declined 1.2% to $90.57
a barrel. Gold futures rose 0.3% to $1,220.40 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 1.1%.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com and
Chris Dieterich at chris.dieterich@wsj.com