By Chuck Mikolajczak and Sinead Carew
NEW YORK (Reuters) - U.S. stocks fell on Friday, putting the benchmark S&P 500 on track for its first weekly decline in eight, after a further drop in oil prices and disappointing data out of China pushed investors away from the raw materials sector.
Oil's fall has added to worries about global demand and raised concerns about earnings for some energy companies, with year-end tax selling putting more pressure on the sector. Even bargain-hunters, for now, are staying away from energy shares.
"Don't try to catch a falling knife. That's what you have here," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.
The S&P energy sector was down 1.2 percent for the session and is down almost 16 percent this year as the worst performing of the 10 major S&P sectors.
Disappointing data that indicated China's economy showed further signs of softening in November weighed on the materials sector, which dropped 2.2 percent, making it the worst-performing S&P sector on the day.
The drop in oil and weakness in China overshadowed a strong reading on U.S. consumer sentiment, which hit an eight-year high. Some investors hope declining gas prices will boost consumer spending enough to offset the energy sector's woes. The consumer discretionary sector was the only one of the 10 S&P sectors in positive territory, up fractionally.
"(Energy is) the main distraction for the market. The good news is that this is a tailwind for the consumer. That's a positive that's being ignored," said Arthur Hogan, chief market strategist at Wunderlich Securities in New York.
Hogan was also relieved that the U.S. Senate was able to approve a spending bill that ended the threat of a government shutdown. Traders on Thursday blamed reports that Congressional leaders had run into an impasse in getting a spending bill finished for a late-day pullback in equities.
Brent crude slipped to a low of $61.91, its lowest since July 2009, and was last down 2.6 percent at $62.04. WTI crude dropped below $58 a barrel and was last down 3 percent at $58.14 as worries persisted over a global supply glut and sluggish demand. [O/R]
The Dow Jones industrial average fell 179.81 points, or 1.02 percent, to 17,416.53, the S&P 500 lost 15.34 points, or 0.75 percent, to 2,019.99 and the Nasdaq Composite dropped 18.33 points, or 0.39 percent, to 4,689.83. For the week, the S&P was down 2.5 percent.
Adobe Systems rose almost 10 percent to $76.56, making it the biggest gainer on the S&P 500 after it announced plans to buy stock photography company Fotolia along with a stronger quarterly report.
Declining issues outnumbered advancing ones on the NYSE by 2,255 to 756, for a 2.98-to-1 ratio on the downside; on the Nasdaq, 1,737 issues fell and 931 advanced for a 1.87-to-1 ratio favoring decliners. The benchmark S&P 500 index was posting 13 new 52-week highs and 34 new lows; the Nasdaq Composite was recording 38 new highs and 137 new lows.
(Editing by Bernadette Baum and Meredith Mazzilli)
