Dow Has Worst Day This Year as Commodities Plunge

NEW YORK, NY - APRIL 15: Traders work on the floor of the New York Stock Exchange on April 15, 2013 in New York City. Following disappointing news on economic growth in China, stocks fell sharply Monday morning with the Dow Jones industrial average down 95 points in morning trading. (Photo by Spencer Platt/Getty Images)
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By MATTHEW CRAFT

NEW YORK (AP) - A steep fall in commodity prices led the stock market to its worst day this year on Monday, as worries about the global economy resurfaced.

The Dow Jones industrial average dropped 265 points, its biggest loss in five months.

The first trigger came from China. News that the world's second-largest economy slowed unexpectedly pummeled oil, copper and other commodities. In the stock market, companies that produce oil and mine for metals fared the worst. A slowdown in China, a huge importer of basic materials like copper, would stymie profits at those companies.

"The weak data out of China is spooking a lot of investors," said Dan Greenhaus, chief global strategist at the brokerage BTIG.

Oil prices hit their lowest level since mid-December, and gold plunged below $1,400 an ounce for the first time in two years as a sell-off in metals continued from last week. Concerns that Cyprus and other troubled European countries may sell gold to raise cash have also weighed on prices for precious metals, Greenhaus said.

The Dow lost 265.86 points to close at 14,599.20, a drop of 1.8 percent. Caterpillar, a maker of heavy equipment used by miners, led the Dow lower, falling 3 percent to $82.27. The Standard & Poor's 500 index slumped 36.48 points to 1,552.37, a loss of 2.3 percent.

It was the biggest drop for the stock market since Nov. 7 – Election Day – last year.

China's economy expanded 7.7 percent in the first three months of the year, well below forecasts of 8 percent or better. That news pummeled copper, oil and other commodities. Crude oil slid $2.58 to finish at $88.71 in New York trading

The plunge in commodity prices hit mining and energy stocks. Cliffs Natural Resources (CLF) lost 8 percent to $17.61. Freeport-McMoRan Copper & Gold (FCX) fell 8 percent to $29.27, the worst drop in the S&P 500. Analysts at Citigroup placed a "sell" rating on the mining giant on the expectation that copper prices will continue sliding.

Of the 10 industry groups in the S&P 500, materials and energy stocks fared the worst, losing 4 percent. Indexes of small companies and transportation stocks, which are more vulnerable to swings in the economy, also fell 4 percent.

The Nasdaq composite fell 78.46 points, or 2.4 percent, to 3,216.49.

Gold prices dropped $140 to $1,361 an ounce, a 9 percent fall. Gold has now slumped $203 an ounce over the past two days.

Frank Fantozzi, CEO of Planned Financial Services, a wealth management firm, says people had bought gold since the financial crisis on the belief it was safe place to keep money. But now that the metal has slid 20 percent this year, they're jumping out.

"I think you're getting some panic selling right now" in the gold market, said Fantozzi. "People who have been holding on to gold expecting a rebound are now thinking, 'I better get out.'"

Cetin Ciner, a finance professor and expert in precious metal markets at the University of North Carolina, Wilmington, said others bought gold as a protection against rampant inflation when the economy recovered. They helped push gold prices as high at $1,900 in 2011. But the high inflation they worried about still hasn't hit.

Gold "was bound to collapse at some stage," Ciner said. "People were waiting and waiting for higher inflation, and they finally realized it's not happening."

Just seven stock rose in the S&P 500 on Monday. Among them, Citigroup (C) inched up 9 cents to $45.87, after the country's third-largest bank reported earnings that beat analysts' estimates. Stronger revenue from trading and investment banking lifted the bank's results.

Sprint Nextel (S) jumped after Dish Network (DISH) offered $25 billion to buy the company. Dish's bid is aimed at beating an offer from the Japanese phone company SoftBank. Sprint surged 14 percent to $7.06, and Dish fell 2 percent to $36.77.

Thermo Fisher Scientific (TMO) offered $13.6 billion to buy genetic testing equipment maker Life Technologies (LIFE). That works out to $76 in cash for each share of Life Technologies. Thermo Fisher's stock fell 1 percent to $78.58, while Life Technologies rose 7 percent to $73.11.

In the market for U.S. government bonds, the yield on the 10-year Treasury note retreated to 1.69 percent, its lowest level of the year. That's down from 1.72 percent late Friday.

The last time the 10-year yield hit 1.69 percent was April 5, when the government reported that U.S. employers hired far fewer workers than expected in March.

People buy U.S. government bonds when they're concerned about the economy.


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26 Comments

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coledude

It looks as though the market has been rigged again.

April 16 2013 at 12:37 PM Report abuse rate up rate down Reply
hsstempe

so how do ya get a better economy, start a WAR.....visit yesterday's Boston Marathon. Let's see if DIP **** NAPOLOTANO STILL CLAIMS THE BORDERS ARE SECURE. Gold, lemme see, can ya eat it? It's like the dirt in the ground. Big Oil is setting yer ass up for summer when you will feel RAPED IN LESS THAN 3 weeks. Social Security funds, long ago spent by BOTH MORON PARTIES without any restraint. Trust fund yer ass! TERM LIMITS FOR POLITICIANS AND A MECHANISM FOR IMMEDIATE TERMINATION OF ANY WORTHLESS AND CRIMINAL POLITICIAN which of course they all are. Do ya feel screwed? Gess what?

April 16 2013 at 11:49 AM Report abuse rate up rate down Reply
drpmindmender

Part of the reason commodity prices are falling, is because the value of the US dollar, which is the universal currency for pricing commodities, IS RISING! That means that the cost of things like CRUDE OIL is DROPPING, which means CHEAPER GASOLINE....

....And people are COMPLAINING!?!

April 16 2013 at 11:32 AM Report abuse rate up rate down Reply
George

Yesterday the worst market day this year. Today even though the price of Gold will still be down the market will jump back up with a great day so the wall street criminals can have a good pay day this week.
JohnCrumpOldBrit: 51% voted the socialist king and his Chicago mafia administration so even though they whine and cry with their hands out they are only getting what they voted for. In the mean time we suffer for their ignorance.

April 16 2013 at 11:28 AM Report abuse -1 rate up rate down Reply
JohnCrumpOldBrit

Democrats ARE the problem spend spend spend that the only thing they know how to do. The Dems had 100% control od congress the LAST two years of Bush and the FIRST two years of Obama THEY are the problem, Pelosi Reid Obama Biden are a bunch of LIARS and thieves, Give away peoples money that they have worked hard to get. Give it to the BUMS that DONT want to work. That's the Democrat Socialist way. Only problem is YOU RUN OUT OF MONEY! Where are ALL the jobs Obama promised?

April 16 2013 at 11:18 AM Report abuse -2 rate up rate down Reply
1 reply to JohnCrumpOldBrit's comment
rostra

Type in the search," which party spends more", and EVERY web site will tell you, the GOP outspends the Dems. I've been a lifelong Republican, yet have not voted since Bush Junior, due to the radical change in direction of the party. To end, in th elast election 49% of those who voted Obama earned in excess of $75k, while 51% who voted GOP earned under $75K, the party of need is our party, given Red States also consume more entitlements than Blue States.

April 16 2013 at 12:44 PM Report abuse -1 rate up rate down Reply
Sparky5229

What will william devain do now more B S on gold.

April 16 2013 at 6:52 AM Report abuse rate up rate down Reply
Iselin007

Any one want to volunteer an pay some bills until the jobs come back?

April 16 2013 at 4:45 AM Report abuse rate up rate down Reply
1 reply to Iselin007's comment
ectullis

Not in our lifetime

April 16 2013 at 5:03 AM Report abuse rate up rate down Reply
Iselin007

And you trust who to save the economy? The WPA would be a better plan than the crap they are pushing today. Now I see ads looking for volunteers to clean up the same stinking parks your taxes are supposed to pay for. Volunteers, undocumented aliens, and visa workers no wonder we haven't got any fuggin jobs. How about hiring some Americans an paying them a freaking living wage already ?

April 16 2013 at 4:42 AM Report abuse +3 rate up rate down Reply
Iselin007

They outsourced the tech jobs that they promised after signing NAFTA an saying the old jobs are going to the third world. Wait this fells like the third world can't the fugging jobs stay here?

April 16 2013 at 4:34 AM Report abuse +1 rate up rate down Reply
Iselin007

They are desperate now soon they will start stealing your SSI funds and pension funds so they can make sure they get their own raises and budgets passed.

April 16 2013 at 4:32 AM Report abuse +1 rate up rate down Reply