U.S. stocks fell on Friday after a surprise move by China to restrict bank lending to cool its surging economy weighed on commodity prices and resource shares.
The hike by China in bank reserve requirements is the second increase in as many months and raised worries about the impact of monetary tightening on global growth.
Markets were also pressured by weaker-than-expected reads on U.S. consumer sentiment and business inventories, and brushed aside a higher-than-forecast figure on January U.S. retail sales, which rose 0.5 percent.
The China policy move boosted the U.S. dollar and knocked commodity prices and resource stocks. Crude oil futures fell 2.5 percent to $73.32 a barrel, and the S&P energy index <.GSPE> fell 1.5 percent.
There are increasing worries that the recovery is not going as fast as we'd hoped, said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.
Worries over high unemployment eroded consumer sentiment early this month. The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for February was 73.7, below analysts' expectation of 75.0.
The Dow Jones industrial average <.DJI> fell 85.78 points, or 0.85 percent, to 10,058.41. The Standard & Poor's 500 Index <.SPX> lost 6.89 points, or 0.64 percent, to 1,071.58. The Nasdaq Composite Index <.IXIC> slipped 4.79 points, or 0.22 percent, to 2,172.78.
The top drag on the Dow was 3M Co
Gainers included Agilent Technologies
(Additional reporting by Rodrigo Campos; Editing by Padraic Cassidy)