By Stephen Bernard and Tim Paradis, AP Business Writers
-A disappointing profit report from Alcoa and steps by China to curtail growth are raising concern among investors that the global economy will have trouble recovering.

Stocks are lower Tuesday as earnings and revenue from aluminum producer Alcoa Inc. fell short of expectations. Investors look the company’s results for an early read on how other corporate profits will turn out.

Meanwhile moves by China to tighten its monetary policy and boost the amount banks must hold in reserve is unsettling some markets. A slowdown in the giant Chinese economy could hurt other countries.

At midday, the Dow Jones industrial average is down 37 at 10,626. The Standard & Poor’s 500 index is down 8 at 1,139, while the Nasdaq composite index is down 21 at 2,291.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — A disappointing profit report from Alcoa and moves by China to curtail growth raised concerns among investors that the global economy will have trouble recovering.

Stocks fell Tuesday morning after earnings and revenue from aluminum producer Alcoa Inc. fell short of expectations. Alcoa is usually the first big U.S. company to report quarterly results, and investors look to its numbers for an early read on overall corporate earnings.

Alcoa said higher metal prices were offset by weakness in the aerospace, construction and gas turbines businesses. Revenue also fell.

The report weighed on energy and industrial stocks. The slide comes after Chevron Corp. warned late Monday that it expects thin profit margins will hurt its fiscal fourth-quarter earnings.

Investors will be tracking revenue as companies report earnings over the next few weeks for signs that customers are opening their wallets again. Many of the earnings gains from last year came from cost-cutting even as sales remained weak.

Concerns about the prospects for Alcoa and other companies that produce raw materials rose after China again tightened its monetary policy and boosted the amount banks must hold in reserve. The moves are aimed at keeping growth in the country from charging ahead too fast, but could also slow the pace of recovery in other countries and hurt companies that sell resources to the world’s most populous nation.

Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn., said China’s incremental steps to tighten monetary policy are likely to be repeated by other central banks this year.

He noted that “2009 was a year the liquidity spigot was open full blast,” and that 2010 will be “a year where central banks reduce the tremendous amounts of liquidity to markets.”

In late morning trading, the Dow Jones industrial average fell 19.35, or 0.2 percent, to 10,644.64. The Standard & Poor’s 500 index fell 5.52, or 0.5 percent, to 1,140.35, while the Nasdaq composite index fell 14.23, or 0.6 percent, to 2,298.18.

The Dow and S&P 500 both rose Monday helped by a rise in industrial stocks, getting a boost after a report showed Chinese exports jumped 18 percent in December. The larger-than-expected increase came after 13 straight months of declines, raising hopes the world economy is recovering.

Monday’s report on Chinese exports and other signs of strengthening in the economy is now pushing the country to tighten its monetary policy. China’s central bank on Tuesday increased the interest rate on its one-year bill to 1.84 percent from 1.76 percent. The rate had been steady since August.

The bank also raised the ratio of reserves that Chinese banks must hold by 0.5 percentage points. That change will go into effect Monday.

Investors also found other reasons to be cautious. Video game publisher Electronic Arts Inc. said it did not see a rebound in sales during the most recent quarter. It slashed its full-year earnings forecast after the market closed Monday, saying weakness in game sales didn’t ease during the holidays.

Alcoa fell $1.48, or 8.5 percent, to $15.97, while Electronic Arts slid $1.26, or 6.9 percent, to $17.01.

Chevron fell 81 cents, or 1 percent, to $80.07. Among industrial stocks, Caterpillar fell $1.81, or 2.8 percent, to $62.32.

The U.S. trade imbalance continued to grow in November. The Commerce Department said a jump in exports was more than offset by growing imports as the economy starts to pick up. The trade deficit climbed 9.7 percent to $36.4 billion, its highest level in 10 months.

Bond prices rose, sending the yield on the 10-year Treasury note down to 3.74 percent from 3.82 percent late Monday.

The dollar slipped, while gold rose.

Oil fell $1.14 to $81.38 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 3.10, or 0.5 percent, to 640.89.

Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 289.7 million shares compared with 286.4 million shares traded at the same point Monday.

Britain’s FTSE 100 fell 0.8 percent, Germany’s DAX index lost 1.6 percent, and France’s CAC-40 dropped 1 percent. Japan’s Nikkei stock average rose 0.8 percent.

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