When China’s government has signaled monetary tightening in recent weeks, U.S. stocks have fallen.

Chinese authorities on January 12 unexpectedly announced that they would raise bank reserve requirements to 16 percent and that day, the S&P 500 index fell 7.6 points.

“China Sneezed And Brazil, Australia, The Commodities Industry, And The US Market All Just Caught A Cold,” stated a headline that day on Business Insider.

Yesterday, when the Chinese government announced that big banks would curb lending for the rest of January, the S&P 500 fell 9.9 points for the day. Similarly, the US dollar, an instrument traded 24 hours a day, reacted immediately to news of Chinese tightening. After the tightening news broke yesterday morning in Beijing, the dollar, considered a safe asset, rallied as much as 100 pips against the euro within 30 minutes.

At 10:00 am today in Beijing, the Chinese government reported its fourth quarter Gross Domestic Product. GDP expanded 8.7 percent for 2009 and 10.7 percent year-on-year for the fourth quarter. It is set to take Japan’s place as the second largest economy in the world. The fourth quarter figure was below market expectation of 10.9 percent according to Reuters, but above the 10.5 percent figure compiled by Bloomberg.

This morning in New York, U.S. unemployment claims rose unexpectedly to 482,000 and the Philly Fed Manufacturing Index slipped more than expected to 15.2, calming including the IMF Chief, the global economy recovery is led by Asia and a Chinese tightening may stall that recovery.

The stock market may also be weighed down by news of President Obama plans to announce today a proposal to further constrain banks by restricting their risk-taking activities of banks.

The iShares FTSE/Xinhua China 25 Index Fund, which tracks the performance of Chinese equities, fell 2.67 percent today.

The Dow Jones U.S. Basic Materials Index, a barometer for the future demand of infrastructure spending, is down 2.45 percent. The Dow is trading at 10,470.6, down 132.55 points or 1.25 percent. The S&P 500 is trading at 1125.77, down 12.27 points or 1.08 percent.