Wall St. ends down in volatile day; materials a drag

Tue Jan 13, 2015 6:07pm EST
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By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks ended down slightly in a volatile session on Tuesday, led by a drop in materials and energy shares following further weakness in commodity prices.

The S&P 500 slipped under its 50-day moving average of 2,046 around midday, triggering weakness, while volume also picked up. All three indexes fell from session highs of more than 1 percent, with the S&P 500 moving more than 48 points from its high for the day to its low, its widest range since Oct. 15.

Shares of homebuilders fell 1.5 percent after KB Home (KBH.N: Quote) forecast a drop in gross margins for the first quarter. Homebuilder stocks had been up earlier in the session, but KB Home dropped 16.3 percent to $13.87, its biggest percentage fall since 1992.

Shares of Freeport McMoran Copper & Gold (FCX.N: Quote) slid 7.5 percent to $21.04, and were the S&P 500's biggest percentage decliner. The S&P materials index .SPLRCMA fell 1.2 percent and was the S&P 500's worst-performing sector.

Copper prices dropped further below $6,000 per tonne to their weakest level in more than five years, while oil prices tumbled to near six-year lows before recovering.

"We're seeing commodity prices continue to go down, not only in oil but across the board. So it's this fear of lower commodity prices leading to global deflation which is leading to this nervousness," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

Large competing positions in the options market were cited for at least some of the early afternoon plunge. Todd Salamone, analyst at Schaeffer's Investment Research, said outsized bets on the index closing above the 2,050 level or below the 2,000 level by the end of the week effectively set off a wave of selling.

The S&P energy index .SPNY was down 0.7 percent, with shares of Exxon Mobil (XOM.N: Quote) down 0.4 percent at $90.   Continued...

Traders work on the floor of the New York Stock Exchange January 8, 2015. REUTERS/Brendan McDermid