The S&P 500 fell to its lowest levels in more than two months on Monday as stocks extended a five-week decline on signs of a slowing economy.

Banks were among the hardest-hit sectors, with the S&P financial sector index <.GSPF> down 1 percent.

This seems like a continuation of sentiment from last week where investors are coming to the realization that the economy is not growing as strongly as once anticipated, said Wasif Latif, vice president of equity investments at USAA Investment Management in San Antonio, Texas.

The weak economic data throughout last week corroborated those suspicions and because of that, you are seeing the continuation (of the equities slide).

The latest disappointing economic news was Friday's U.S. employment report, which showed a paltry 54,000 jobs were added last month and the unemployment rate rose to 9.1 percent.

With second-quarter earnings season more than a month away, the market continued to focus on the uncertain economic outlook.

Buyers slowly emerged after the S&P 500 hit its lowest level since March 23, with some in the market expecting the last five weeks of selling to entice investors. The S&P 500 is down roughly 5 percent from its 2011 high hit early in May.

I don't expect the market to run, but we're getting to levels where there's going to be some real good value down there, said Muriel Siebert, chairwoman of Muriel Siebert & Co in New York. (Investors) can buy and put a lot of good stocks away for the long term.

The Dow Jones industrial average <.DJI> dropped 19.75 points, or 0.16 percent, to 12,131.51. The Standard & Poor's 500 Index <.SPX> fell 5.97 points, or 0.46 percent, to 1,294.19. The Nasdaq Composite Index <.IXIC> lost 9.66 points, or 0.35 percent, to 2,723.12.

Shares of Bank of America Corp slid 2.8 percent to $10.96 while Citigroup Inc fell 3.1 percent to $38.60.

Given the problems in housing, there's still uncertainty about how banks will be able to maintain their recovery, said USAA's Latif.

In a sign the weak economy was threatening earnings, JP Morgan cut its rating on home improvement chain Lowes Cos Inc , citing softening home prices and stagnant job growth. The shares fell 1.5 percent to $23.05.

In one potential bright spot for investors, Apple Inc Chief Executive Steve Jobs appeared at the unveiling of a music-streaming service the company hopes will power its next stage of growth.

An exchange-traded fund that tracks Peruvian stocks tumbled about twice its daily average volume after left-wing former army commander Ollanta Humala won the presidential election.

The iShares MSCI All Peru Capped Index Fund fell about 12 percent to $38.32, while U.S.-traded shares of miner Compania de Minas Buenaventura dropped 10.7 percent to $37.54.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry)