NEW YORK — U.S. stock indexes fell in midday trading Monday after China moved to raise interest rates to combat spiking inflation.
A blizzard in the Northeast is making this a quiet day on Wall Street by disrupting commutes for many people who in the financial industry. Trading is expected to be light throughout the week as the New Year’s holiday approaches.
A year-end rally based on improving economic reports and the extension of tax cuts for another two years has pushed stock indexes to two-year highs.
In midday trading, the Dow Jones industrial average fell 34 points, or 0.3 per cent, to 11,540. The Standard and Poors 500-stock index fell 2, or 0.2 per cent, to 1,255. The Nasdaq composite index fell 14, or 0.5 per cent, to 2,653.
The Toronto Stock Exchange is closed in lieu of the Christmas and Boxing Day holidays and will reopen for trading on Wednesday.
China’s move over the weekend is the second time in three months that the country has taken steps to slow the pace of its economic expansion. Inflation jumped to its highest levels in two years in November. Any slowdown in China can affect stocks worldwide. Bank of America Corp. estimates that emerging markets like China account for 80 per cent of the world’s economic growth.
Shares were down sharply overseas.
American International Group Inc. shares rose 8.9 per cent to lead the S&P index. The insurer said Monday that it had obtained $3 billion in credit facilities, making another step on its road to recovery.
Cisco Systems Inc. gained 2.3 per cent to $20.15 to lead the 30 stocks that make up the Dow index. Alcoa Inc. had the largest loss. The company fell 1.6 per cent to $15.10.
Eight of the 10 company groups in the S&P 500 fell. Financial companies, which rose 0.6 per cent, had the largest change of any group.
The yield on the 10-year Treasury note rose slightly to 3.41 per cent.