U.S. stocks fell on Friday as investors adjust to a more aggressive monetary policy from China, mixed data on U.S. consumers and disappointing reports of euro zone Gross Domestic Product (GDP).

European big banks are struggling and the basic materials sector continues to be volatile.

The S&P 500 Index is down 0.97 percent, or 10.46 points, to trade at 10,027.35 at 11:21 a.m. EST.  The Dow Jones Industrial Average is down 1.15 percent, or 116.84 points, to trade at 10,027.35.

After a rather modest loss yesterday, the American Depository Receipts (ADRs) of National Bank of Greece dropped 4.53 percent today.  Other European banks traded on the New York Stock Exchange are also selling heavily.

After gaining 3.61 percent yesterday, the ADRs of Rio Tinto (NYSE:RTP) are down 2.10 percent.  Most raw materials stocks exhibited a similar pattern. 

As uncertainty still persists about the specifics of Greece's financial bailout by the European Union, another factor policy makers must now contend with is missed expectations regarding GDP growth in the euro zone. The 16 members of the euro zone grew only 0.1 percent in the fourth quarter.  For the year of 2009, it contracted 4.0 percent.

German GDP growth was flat for the quarter; Italy contracted 0.2 percent, Spain declined 0.1 percent, and Greece shrank 0.8 percent.

U.S. retail sales rose more than expected, although consumer sentiment declined from the previous reading and missed expectations.  Retailer stocks are subdued today, with most falling modestly.

China raised the reserve requirement for big banks to 16.50 percent, from 16.00 percent.  It announced this decision after their stock market closed.  The Chinese stock market will then take a week-long break for Chinese New Year and reopen on February 22.

After experiencing greater than expected growth rate last year, buoyed by the extraordinary level of liquidity, it is not surprising that China is normalizing their policy, according to Kimberly DuBord, the Director of Research for Briefing.com. 

 China is the growth engine for the global economy, said DuBord, people will be watching their monetary policy closely. Commodity producers are simply readjusting themselves to China's more aggressive policies and the high levels of volatility are expected.

Follow us on twitter @IBTFinance