U.S. Stocks Slip After Three-Week Rally as Bank Shares Decline – Bloomberg

U.S. stocks retreated from a two-month high, falling for the first time in five days amid declines in banks and technology shares as investors assessed China's growth prospects.

The Standard & Poor's 500 Index dropped 0.5 percent to 1,989.99 at 9:32 a.m. in New York, after capping on Friday its longest rally since October.

"We're likely to see a period of heightened volatility and it's a very frustrating environment," said Eric Wiegand, senior portfolio manager at the Private Client Reserve of US Bank in New York. "Expectations surrounding the ECB are going to be at play this week as certainly part of the bounceback we've seen over the last number of weeks has been part of the expectation that the ECB, Bank of Japan and – to an extent – the PBOC, would go to extraordinary measures to be accommodative."

China's leaders failed to announce specific measures to support the world's second-biggest economy at an ongoing annual legislature meeting, damping speculation of more stimulus. They set an expansion goal of 6.5 percent to 7 percent for 2016, down from last year's target of around 7 percent, and said they will permit a record-high budget deficit.

Investors will turn their attention later this week to the European Central Bank's policy meeting, and Federal Reserve officials will gather for their next two-day meeting on March 15. Traders are pricing in a less than one-in-10 chance the central bank will increase interest rates this month, with the probability rising to 43 percent by mid-year. Odds for a December move are 71 percent. Fed Vice Chair Stanley Fischer is scheduled to speak at 1 p.m. today.

The S&P 500 closed Friday at its highest since Jan. 5 after rising for a third straight week, the longest such stretch this year. The gauge has rallied 9.3 percent since reaching a 22-month low last month, as oil prices stabilized and data has shown the world's largest economy weathering weaker growth abroad.

A rout in crude amid concerns that a slowdown in China would spread had helped send the benchmark equity index down as much as 11 percent this year on a closing basis, a drop that has since been trimmed to 2.2 percent. Energy and industrial shares last week erased their 2016 losses.

Meanwhile, the Chicago Board Options Exchange Volatility Index closed last week near the lowest level this year, after falling almost 15 percent over five days. The measure of market turbulence known as the VIX is down 40 percent in the last three weeks.