Bad news from China sends stocks sliding

After last week's stock market rally, the Dow fell 52 points to close at 13,254 on Monday. Investors hope potential new stimulus funding will send stock prices bouncing back.

Stocks slipped on Wall Street as troubling economic news from China and the U.S. outweighed optimism about more stimulus from the Federal Reserve.

The Dow Jones industrial average fell 52.35 points to close at 13,254.29 on Monday. The Standard & Poor's 500 slipped 8.84 points to 1,429.08 and the Nasdaq composite fell 32.40 points to 3,104.02.

The stumble marks a pause in a rally last week that took the Dow and the S&P 500 to their highest levels in more than four years.

Stock markets rose around the world last week after the European Central Bank announced a long-anticipated plan to support struggling countries in the European Union.

Investors are hopeful that the Fed will act this week to support the U.S. economy. The monetary policymaking body of the Federal Reserve meets on Wednesday and Thursday. Many anticipate a third round of bond purchases or other support for the financial system.

Federal Reserve chairman Ben Bernanke indicated in a speech last month that the central bank is inclined to provide new stimulus to the U.S. economy if it's needed.

Since the speech, the government reported weak growth in jobs last month, heightening the case for more stimulus. There have also been new signs that manufacturing and construction are slowing down.

On Monday, the Fed also reported that Americans cut back on their credit card use in July for the second straight month, suggesting many remain cautious in the face of high unemployment and slow economic growth. Total borrowing dipped $3.3 billion in July from June to a seasonally adjusted $2.705 trillion.

"The economy is not going through a nosedive, so I'm not sure we need another stimulus," said John Manley, chief equity strategist at Wells Fargo Advantage Funds. "But Bernanke would rather make a mistake going in early with stimulus than not, especially since the markets will not tolerate inaction."

There were also discouraging news out of China, giving investors more reason to worry that one of the most important engines of the global economy is sputtering. Auto sales growth slowed in August and imports shrank unexpectedly. Factory output also slid to three-year low last month. The Chinese president warned growth could slow further.

Among stocks that made big moves:

— Sprint Nextel climbed 2.4 percent after the country's third-largest cellphone company was upgraded by an analyst, who said the company's ongoing network revamp would save it money. The stock rose 12 cents to $5.15.

— LeapFrog Enterprises dropped 80 cents, or almost 9 percent, to $8.35. The educational toy maker's LeapPad product will face new competition from Toys R Us, which announced plans to launch its own tablet computer aimed at children next month.

— American International Group fell after the U.S. government said Sunday it was selling shares in the insurer that would decrease its holdings below a majority stake for the first time since the bailout of AIG in 2008. AIG's stock lost 69 cents, or 2 percent, to $33.30.

— Shares of Geron Corp. plunged 56 percent after the company announced two setbacks for its experimental cancer drug. Geron has ended one study and does not expect the drug to succeed in a second. Its stock fell $1.62 to $1.28.