Stocks fall after commodities drop
NEW YORK » Declining oil prices and weakness in other commodities sent stocks lower yesterday, as investors took profits and beat up the equities that led Wall Street's early January rally.
Gold, silver, oil -- "anything you can drop on your foot and it hurts" -- is retreating, said Gary Kaltbaum, a money manager in Orlando, Fla.
The run up in commodities prices "went too far too fast," he said. Copper prices, for instance, broke through $4,000 a ton three months ago and passed $5,000 a ton last week, according to Merrill Lynch.
Investors sold off oil-sector stocks after oil futures dropped more than $2 a barrel, but they didn't move their money into financial or semiconductor stocks, as they did the last time oil dropped, said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds.
"A lot of (the selling) is technical," he said. "People are selling off the winners they had in January."
The Dow Jones industrial average fell 48.51, or 0.45 percent, to 10,749.76.
Broader stock indicators were also lower. The Standard & Poor's 500 index fell 10.24, or 0.81 percent, to 1,254.78, and the Nasdaq composite index fell 13.84, or 0.61 percent, to 2,244.96.
Bonds fell, with the yield on the 10-year Treasury note rising to 4.57 percent, up from 4.54 percent late Monday. The U.S. dollar was mixed against other major currencies in European trading. Gold prices declined.
Crude oil futures dropped as U.S. weather remained mild, petroleum inventories remained strong and fears receded over possible disruptions to Iranian oil. A barrel of light crude settled at $63.09, down $2.02, in trading on the New York Mercantile Exchange.
The mood on the Street seems to have changed, with investors returning to the jitters that largely defined 2005.
While yesterday's earnings surprises were positive, with Walt Disney Co. and Emerson Electric Co. beating analysts' expectations, they weren't enough to send the indexes higher.
"For some reason, the market wants to focus on other things," said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. The message, he said, is that investors aren't enamored with stocks and are waiting for a big catalyst that will lift stock prices.
One measure of the sentiment shift: One of the Street's most bullish strategists, Prudential Financial's Ed Keon, cut his recommended stock weighting to 55 percent this week from the 100 percent allocation he has recommended since July.