Wall Street dragged down by material and industrial stocks

By Tanya Agrawal

REUTERS - Wall Street fell in volatile trading on Wednesday as weak Chinese and U.S. factory data hit material and industrial stocks.

Data showed U.S. manufacturing growth stayed at a two-year low in September, while Chinese factory activity shrank to a 6-1/2 year low in the month.

The S&P materials index was down 1.5 percent. The industrial sector was lower by 0.9 percent, with Dow components United Technologies and Boeing falling more than 2 percent.

The volatility in the U.S. stock market has increased recently as investors fret over a China-led global economic slowdown, a concern the Federal Reserve alluded to last week when it left interest rates unchanged.

"Investors are sitting back and still assessing the Fed comments and looking more closely at global economic data," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

At 11:49 a.m. ET (1549 GMT) the Dow Jones industrial average was down 94.26 points, or 0.58 percent, at 16,236.21. The S&P 500 was down 6.76 points, or 0.35 percent, at 1,935.98 and the Nasdaq composite was down 9.49 points, or 0.2 percent, at 4,747.24.

Nine of the 10 major S&P sectors were lower, with only the health sector eking out a 0.2 percent gain.

Scott Schermerhorn, chief investment officer at Granite Investment Advisors said volatility was likely to continue until the third-quarter corporate earnings season starts.

The CBOE Volatility index, popularly known as the "fear gauge", was down 0.5 percent at 22.43, but remained above its long-term average of 20.

Declining issues outnumbered advancing ones on the NYSE by 1,739 to 1,147. On the Nasdaq, 1,488 issues fell and 1,147.

The S&P 500 index showed no new 52-week highs and 32 new lows, while the Nasdaq recorded 18 new highs and 82 new lows.

(Reporting by Tanya Agrawal, Additional reporting by Sinead Carew; Editing by Savio D'Souza)