U.S. stocks fell Monday as evidence piled up that the global economic slowdown is dragging down Asia.
The losses broke the longest winning streak for the Standard & Poor's 500 index since December 2010. The index had risen for six straight days.
Japan's economy grew in the second quarter at a 1.4 percent annual rate, slower than many analysts had expected. Last week, China released dismal figures on retail sales and exports in July. Traders had hoped Beijing would roll out stimulus measures over the weekend. That did not happen.
Slower growth in Asia worries investors because Asia's strength has helped offset weakness in the United States and Europe in recent years. Exports from China and Japan are falling as Europe's economic troubles hurt consumer confidence there.
"What's happened is the law of gravity is starting to hit," said Doug Cote, chief market strategist at ING Investment Management. Japan is volatile because it is still recovering from last year's massive earthquake and tsunami, he said, and China's growth is slowing sharply.
Yet stocks, bonds and most other investments are all up for the year, Cote noted. He said the markets have been "pricing in Armageddon when clearly things are much better than that." Cote expects stocks to resume their rise as fears about the global economy dissipate.
The Dow Jones industrial average closed down 38.52 points at 13,169.43. The S&P 500 declined 1.76 to 1,404.11. The Dow is still up 7.8 percent for the year, the S&P 11.7 percent.
The Nasdaq composite index rose 1.66 points to 3,022.52. The index was helped by solid gains for two of its biggest components, Apple Inc. and Google Inc.
Google rose 2.8 percent after announcing it would cut 20 percent of the staff at Motorola Mobility, the struggling mobile phone maker it acquired in May. Motorola hasn't had a hit product since it introduced the Razr in 2005. Google's stock rose $18.01 to $660.01. Apple rose $8.30 to $630.
Most Asian and European markets closed lower. Stocks edged higher in Spain. Many traders believe that the European Central Bank will take a more active role in fighting the region's debt crisis by reducing borrowing costs for Spain, Italy and others.
Monetary authorities in the United States and China also are believed to be weighing plans to boost growth. Central banks have been hesitant to get involved with an economy that may be on the cusp of a rebound. They are mindful, however, of the effect that a slow recovery has on businesses and consumers.
The lack of global demand is trimming revenue for U.S. companies. Many are cutting costs to limit profit declines.
Investors had divergent reactions to two major asset sales by energy giant BP:
Tesoro Corp. rose 9.5 percent, the most in the S&P 500 index, after saying it would pay $2.5 billion cash for a California refinery, pipelines, storage terminals and Arco-branded retail outlets in the Southwest. Tesoro's stock jumped $3.37 to $38.87.
Eagle Rock Energy Partners fell 2.7 percent after the company agreed to buy two BP gas processing plants in Texas for $227.5 million in cash. The stock fell 24 cents to $8.72.