US shares fall on fears of extended energy sell-off

Dow Jones: 12,263.58 (-116.53) SP 500: 1314.60 (-10.30) Nasdaq: 2,744.79 (-26.72): US STOCKS fell yesterday on worries that falling oil prices could set off a reversal in the high-flying energy sector, while Alcoa's leaner-than- expected revenue disappointed.

Energy stocks led the SP 500’s losses, with the SP energy index down 3 per cent.

Strategists were already worried the rally in energy stocks may have gone too far ahead of earnings and a drop in oil prices could spark an extended sell-off. Unrest in oil-heavy regions of the Middle East and north Africa has fuelled a sharp rise in oil prices. The energy index, by far the market’s top-performing sector in the first quarter, is up 11.1 per cent in 2011 – well above the SP 500’s gains of 4.5 per cent since the start of the year.

Signalling the start of the US first-quarter earnings period, Alcoa reported late on Monday that revenue that missed forecasts. Its profit, however, topped expectations. Alcoa’s stock slid 6 per cent to $16.70 and was the Dow’s biggest percentage loser of the day.

Materials stocks in general fell in sync with declines in metals prices. Investors are worried that Japan’s massive earthquake and a nuclear crisis could weaken recovery prospects.

The SP materials index fell 1.4 per cent while US-traded shares of Rio Tinto fell 2.3 per cent to $72.13. Freeport-McMoRan Copper Gold shed 3.1 per cent to $53.70.

Volume was below average on the NYSE, Amex and Nasdaq, with 7.53 billion shares changing hands, compared with last year’s daily average of 8.47 billion.

Shares of Community Health Systems rebounded from losses the previous day, when Tenet Healthcare fired charges against its unwanted suitor. Community Health shares shot up 21.6 per cent to $31.48.

A huge jump in shares of Identive Group, up 113.91 per cent at $5.69 on heavy volume, came a day after the provider of identification technologies said its unit got a Google contract to supply near field communication stickers for its business listing services.

Some Chinese-domiciled companies were among the Nasdaq’s biggest losers. These companies have been coming under scrutiny several Chinese names have been delisted from US exchanges. China Shengda Packaging Group was down 7.3 per cent at $2.55 while China Automotive Systems lost 9.2 per cent to $9.70. – (Reuters)