CLOSING BELL

Dow 10389.88  -213.37, Nasdaq 2265.70  -25.55, S&P 1116.48  -21.56

A tighter monetary policy in China and increased bank regulation combined with a poor employment report caused another day of big declines for the market.

China reported stronger-than-expected fourth quarter GDP growth and a sharper-than-expected spike in inflation; this led to thoughts that the Chinese government would tighten monetary policy.  Last week they did announce they would limit bank lending.  Tighter policy in China would slow the country's growth and slow the global economic recovery.

The thought of a slower global economy caused stocks and commodities to sell off.  Material stocks were hit hard again today after falling -3.6% yesterday they shaved off another 4.3% today.  The thought is, with a slower global economy materials will not be in demand.

Also a slower economy equals less energy being needed.  Energy stocks dropped -2.0% as oil prices were pushed to a near one-month low of $75.66 per barrel before they finished a -2.1% loss at $76.08 per barrel. Price erosion came in the face of a surprise inventory large draw of 4.7 million barrels during the week that ended Jan. 15.

Financials have been getting crushed and traded -3.0% lower. President Obama stirred concern for financials with the announcement that plans are being put together to ensure that no bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit. Further, the proposal will place broader limits on the excessive growth of the market share of liabilities at the largest financial firms. This comes on the heels of last week’s announcement by the administration of a new tax placed on financials companies.  Both of these actions would be a huge negative for big financial institutions.