Wednesday, December 11, 2013
By MATTHEW CRAFT/The Associated Press
NEW YORK - 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.
Gold bars are prepared at the Emirates Gold Co. in Dubai. Gold has plunged more than 10 percent the last two days.
2012 AP file photo
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.
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.
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, below forecasts of 8 percent or better. The news hurt copper, oil and other commodities. Crude oil slid $2.58 to finish at $88.71 in New York trading
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 ... expecting a rebound are now thinking, 'I better get out."'