US Stocks Fall as Commodities Prices Drop and Profit Concerns Rise

Strategic Insights -

US stocks declined yesterday due to drops in oil and metals prices, which weighed down energy and materials shares, while concerns about lower supermarket profits hit consumer stocks. The S&P materials index fell 1.6% and the energy index dipped 1.1% as metals and oil prices decreased following recent gains. The market's fall followed a strong start to the new year on Monday and a robust rally at the end of 2010, with the Dow and S&P 500 recently hitting two-year highs as economic data indicated a solid US recovery. Despite the decline, market analysts remain optimistic about the long-term prospects for commodity prices.

Key Takeaways:

  • The S&P materials index slid 1.6% yesterday as metals and oil prices dropped after recent gains.
  • The energy index dipped 1.1% as a result of the decline in oil prices.
  • Shares of Supervalu fell nearly 7% after Morgan Stanley advised investors to cut holdings in the stock, citing rising food costs that will crimp margins.
  • Safeway and Whole Foods Market also slid, with shares down 3.3% and 3.5%, respectively.
  • The Dow Jones industrial average added 20.43 points, or 0.18%, to 11,691.18.
  • The Standard & Poor's 500 Index slid 1.69 points, or 0.13%, to 1,270.20.
  • The Nasdaq Composite Index dropped 10.27 points, or 0.38%, to 2,681.25.
  • Materials and energy were among the top-performing sectors in 2010.
  • Morgan Stanley offered a contrarian view, forecasting a year-end target for the S&P 500 below 2010's close.
  • Over 7.7 billion shares were traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq, above the 50-day moving average.
  • Supervalu's shares dropped 6.7% to $8.97, while Safeway and Whole Foods fell 3.3% and 3.5%, respectively.

Statistics:

  • S&P materials index fell 1.6% yesterday.
  • Energy index dipped 1.1% as a result of the decline in oil prices.
  • Supervalu's shares fell 7% after Morgan Stanley advised investors to cut holdings.
  • Safeway's shares down 3.3% and Whole Foods Market's shares down 3.5% yesterday.
  • Dow Jones industrial average added 20.43 points, or 0.18%, to 11,691.18.
  • Standard & Poor's 500 Index slid 1.69 points, or 0.13%, to 1,270.20.
  • Nasdaq Composite Index dropped 10.27 points, or 0.38%, to 2,681.25.
  • Over 7.7 billion shares were traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq.
  • Supervalu's shares dropped 6.7% to $8.97.

Sources:

  • Bloomberg News
  • Morgan Stanley
  • Wells Fargo Advisors
  • Wall Street Journal