US stocks fell on Monday as shares of energy and commodity-related companies tumbled on falling oil and metals prices and investors worried the housing slump could fuel further losses at financial companies. The drop in the price of oil and other commodities was partly on concern that a global slowdown would blunt demand.
Exxon Mobil shares dropped nearly 4 percent, while miner Freeport McMoran's shares slid 12 percent. The tone for the financial sector was set early in the session, after HSBC, Europe's biggest bank, reported a 28 percent drop in first-half profit as it took a $14 billion hit from bad debts on US home loans and asset write-downs. Wachovia Corp fell almost 10 percent after a Wall Street analyst suggested investors unload shares of the fourth-largest US bank.
US economic data pointing to mounting inflation pressures added to the market's concerns, as did news that WCI Communities, a major US home builder, had filed for bankruptcy. "Oil is down, but it's because global growth is slowing. The panacea that people thought a decline in oil would be has not come to pass," said Peter Boockvar, equity strategist at Miller, Tabak & Co in New York.
The Dow Jones industrial average fell 42.17 points, or 0.37 percent, to 11,284.15. The Standard & Poor's 500 Index slid 11.30 points, or 0.90 percent, to 1,249.01, while the Nasdaq Composite Index dropped 25.40 points, or 1.10 percent, to 2,285.56. The S&P financial sub-index fell 1.3 percent.
Among energy companies, Exxon Mobil shares slid 3.9 percent to $76.60 and Chevron dropped 1.8 percent to $82.80. Miner Freeport McMoran's shares fell 12.0 percent to $80.35. Fertiliser stocks, such as Terra Industries and Mosaic, also fell. Terra shares fell 14.8 percent to $45.94, while Mosaic's shares dropped 10.9 percent to $109.29.
US crude fell $3.69, or 2.95 percent, to settle at $121.41 a barrel after earlier slipping below $120. Copper futures hit a six-month low as all the industrial metals declined after rising inventories on the London Metal Exchange reinforced concerns that economic slowdown could dent demand. Gold dropped more than 1 percent.
"With crude oil and gold down, there seems to be a wave of selling in the commodity/fertiliser stocks. There is a general feeling that the world-wide economies are slowing," said William Lefkowitz, options strategist at brokerage firm finance Investments. The Dow Jones home construction index fell 1.7 percent to 272.40, after WCI Communities said it filed for Chapter 11 bankruptcy protection because it failed to obtain the financing that would keep $1.8 billion of debt out of default.
Among Nasdaq stocks, shares of chip maker Qualcomm were the biggest drag on the Nasdaq 100, with Qualcomm dropping 4.7 percent to $52.87 after Motorola said it has hired Qualcomm's chief operating officer to head its money-losing mobile devices unit.
Trading volume was low on the New York Stock Exchange, with about 1.23 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.01 billion shares traded, also short of last year's daily average of 2.17 billion. Declining stocks outnumbered advancing ones by 2 to 1 on both the NYSE and the Nasdaq.