Stiff declines in energy and metals prices

Dow Jones: 11,010.90 (-179.79) Nasdaq: 2,491.58 (-55.25) SP 500:1,151.06 (-24.32)

COMMODITY-RELATED stocks drove Wall Street lower yesterday as stiff declines in energy and metals prices underscored investor concerns about global economic weakness and Europe’s raging debt crisis.

A sharp 7 per cent dive in the price of copper, seen as a leading indicator for the economy, rattled investors and led to a drop of 4.5 per cent in the S&P materials index.

Freeport-McMoRan Copper & Gold fell 7.3 per cent to $32.29.

Investors were on a knife edge as inspectors from the EU and IMF headed to Greece to scrutinize austerity plans while German Chancellor Angela Merkel worked to defuse a revolt within her government ahead of a vote to expand Europe’s bailout fund on Thursday.

Wednesdays declines put the S&P 500 on course for its worst quarter since the high noon of the financial crisis in the fourth quarter of 2008. The drop also illustrates how sensitive the market has become to news on Europe’s troubles.

Brent crude resumed its downward trend, falling more than $3 in afternoon trade, sending an S&P index of energy stocks down 3 per cent. Chevron fell 1.9 per cent to $91.74.

News early in the afternoon that bans on short-selling stocks in France, Italy and Spain have been extended highlighted the regulatory risk faced by investors and increased selling pressure.

The Dow Jones industrial average dropped 179.79 points, or 1.61 per cent, to 11,010.90. The S&Ps 500 Index dropped 24.32 points, or 2.07 per cent, to 1,151.06. The Nasdaq Composite Index dropped 55.25 points, or 2.17 per cent, to 2,491.58.

Traders said volume would be light and market movements accentuated during the rest of the quarter due to the Jewish New Year holiday of Rosh Hashanah.

So far, the S&P 500 has fallen 12.8 per cent this quarter, its worst decline since the fourth quarter of 2008 when it fell 22.6 per cent.

In the commodities sector, Cliffs Natural Resources sank 8.4 per cent to $55.66. Gold prices fell more than 2 per cent.

Amazon.com gained 2.5 per cent to $229.71 after it unveiled a new tablet computer with a $199 price tag. Apple , which makes the popular iPad tablet, fell 0.6 per cent to $397.01. – (Reuters)