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US: Commodities slump hits stocks


[NEW YORK] The Dow and S&P 500 tumbled on Tuesday as petroleum and metals producers retreated on weak oil prices and news of massive layoffs at mining giant Anglo American.

The Dow Jones Industrial Average dropped 162.51 points (0.92 per cent) to 17,558.00, while the broad-based S&P 500 fell 13.48 (0.65 per cent) to 2,063.59.

The tech-rich Nasdaq Composite Index ended a bit lower at 5,098.24, down 3.57 (0.07 per cent).

Most oil shares suffered another session in the red, with Dow member ExxonMobil losing 2.8 per cent and oil-services giant Schlumberger 1.8 per cent. The declines came after oil prices touched fresh mult-year lows.

News that Anglo-American would cut a staggering 85,000 jobs, or almost two-thirds of the company's workforce, weighed on metals stocks. Alcoa lost 5.8 per cent and Freeport-McMoRan 6.8 per cent.

"It is a complete rout in the commodities segment and that's troubling to the market," said Mace Blicksilver, director of Marblehead Asset Management.

Gregori Volokhine, director of Meeschaert Capital Markets, said the market may be overreacting to the pullback in oil, given that the drop in prices is due in part to oversupply from the Organization of the Petroleum Exporting Countries.

"If it's not a problem of weak demand, why should the effect be so negative on markets?" he asked.

Morgan Stanley fell 1.8 per cent as sources close to the matter said it would cut 1,200 jobs, including 470 bankers and traders in its fixed-income trading division. Other banks also fell, with JPMorgan Chase losing 1.6 per cent and Citigroup 1.9 per cent.

Southwest Airlines tumbled 9.0 per cent after forecasting that revenues per seat-mile would be flat to negative one percent for the fourth quarter. Other airlines fell, with United Continental sliding 3.1 per cent and American Airlines 2.7 per cent.

Chipmaker Qualcomm fell 5.6 per cent after the European Commission charged it with anticompetitive pricing aimed at keeping rivals out of the market. Qualcomm said that it will respond to the allegations and that it has complied with the law.

Chipotle Mexican Grill fell 1.7 per cent after it shut a restaurant in Boston after dozens of patrons became sick. A Chipotle spokesman told Bloomberg that the incident is under investigation and that "there are no confirmed cases of E. coli connected to Chipotle in Massachusetts."