Markets slump as financials slip, commodities jump
NEW YORK — Stocks retreated Thursday as financial shares fell for the first time in three days. Commodities, however, surged the most this year, and the dollar weakened against the euro.
The Standard & Poor’s 500 index dropped 1.3 percent to 784.04. The Dow Jones industrial average lost 85.78 points, or 1.2 percent, to 7,400.80. The Russell 2000 index of small companies slumped 1.1 percent to 413.26.
Thursday’s was only the second losing trading session out of the past eight. Through Wednesday, the S&P 500’s 14-day relative strength index, a measure of whether stocks have risen too far too fast, was at its highest level since October 2007.
"Everyone’s holding their breath and asking whether this rally has legs to it or not," said Keith Wirtz, chief investment officer at FifthThird Asset Management in Cincinnati. "A lot of money is still on the sidelines."
Financial shares had risen in seven of the previous eight days, advancing 54 percent from March 6.
JPMorgan Chase & Co., the biggest U.S. bank by market value, fell 8 percent Thursday to $24.95. Morgan Stanley declined 13 percent to $21.04, and Goldman Sachs Group Inc. slid 5.7 percent to $99.30.
The Fed’s plan to lower interest rates by buying $1.2 trillion in mortgage-backed securities and government bonds has some on Wall Street speculating on inflation.
"We may end up with higher inflation down the road," said New York-based David Tien of Fischer Francis Trees & Watts fast cash advance. "The biggest winner will be commodity currencies followed by the euro."
The dollar slid 1.4 percent to $1.3666 per euro. It touched $1.3738, the weakest level since Jan. 9.
Precious metal prices rose as investors sought a hedge against inflation.
Silver futures for May jumped $1.585 an ounce, or 13 percent, to $13.52, the most since 1979. Gold futures for April delivery surged $69.70, or 7.8 percent, to $958.80 an ounce, the biggest increase since September.
Energy prices also rose on speculation that the Fed’s steps will spur demand for raw materials. Benchmark crude for April delivery surged $3.47, or 7 percent, to settle at $51.61 a barrel on the New York Mercantile Exchange.
Other stocks that moved substantially or traded heavily Thursday included:
•Citigroup Inc., down 48 cents at $2.60: The struggling bank plans to increase the number of its common shares outstanding and may execute a reverse stock split.
•FedEx Corp., up $2.05 at $45.10: Quarterly profit tumbled 75 percent on severe weakness in the global economy and the package delivery company will cut more jobs.
•Alcoa Inc., up 92 cents at $6.40: The aluminum maker expects to raise $1.3 billion from stock and convertible note sales, and a JPMorgan analyst upgraded shares.
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