Commodities hammered North American stocks on Tuesday, hitting major U.S. indexes hard and sending Canada's commodity-heavy benchmark index to its second triple-digit decline this week.
The Dow Jones industrial average closed at 12,263.58, down 117.53 points or 1 per cent. The broader S&P 500 closed at 1314.16, down 10.30 points or 0.8 per cent. In Canada, the S&P/TSX composite index closed at 13,801.40, down 195.46 points or 1.4 per cent.
Commodities were largely to blame for the setbacks. The CRB index of 19 commodities fell 1.9 per cent, marking its biggest one-day reversal since mid-March. Crude oil fell to $106.25 (U.S.) a barrel, down $3.67. Gold fell to $1453.60 an ounce, down $14.50.
Among energy producers, Chevron Corp. fell 3.3 per cent, Suncor Energy Inc. fell 3.4 per cent and Canadian Natural Resources Ltd. fell 2.7 per cent. Among materials stocks, Teck Resources Ltd. fell 3.6 per cent, Potash Corp. of Saskatchewan Inc. fell 1.3 per cent and Barrick Gold Corp. fell 0.6 per cent.
There was no shortage of reasons for the commodity reversals. In Japan, officials offered a more serious assessment of the nuclear crisis there, raising concerns about the implications for the economy and its need for commodities.
As well, the International Energy Agency warned on Tuesday about the impact of rising oil prices on the global economy, marking the second such warning in two days. On Monday, the International Monetary Fund released similar concerns about rising energy prices.
Meanwhile, Goldman Sachs strategists said that the commodities boom is coming to a close and recommended investors step away from long positions on key commodities such as crude oil, copper, cotton and platinum.
The commodity rout comes one day after Alcoa Inc. kicked off the unofficial start of the first quarter earnings season in the United States. While the aluminum producer topped earnings forecasts by a penny, it missed revenue expectations. The shares fell 6 per cent.
Meanwhile, some blue-chip defensive stocks held up reasonably well amid the selloff. Wal-Mart Stores Inc. rose 1.3 per cent, Procter & Gamble rose 1.1 per cent and Kraft Foods Inc. rose 0.3 per cent.
As well, Gildan Activewear Inc. rose 7 per cent, after the clothing company announced a $350-million deal to buy sock-marker Gold Toe Moretz Holdings Corp.