Market Wrap: Wall Street Ends Lower in Volatile Session

new york stock exchange trader
Richard Drew/AP

By Caroline Valetkevitch

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

The Standard & Poor's 500 index (^GPSC) slipped under its 50-day moving average of 2,046 around midday, triggering weakness, while volume also picked up. All three indexes fell from highs of more than 1 percent during the session, 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 forecast a drop in gross margins for the first quarter. Homebuilder stocks had been up earlier in the session, but KB Home (KBH) dropped 16.3 percent to $13.87, its biggest percentage fall since 1992.

%VIRTUAL-pullquote-We're seeing commodity prices continue to go down, not only in oil but across the board.%Shares of Freeport McMoRan (FCX) slid 7.5 percent to $21.04, and were the S&P 500's biggest percentage decliner. The S&P materials index 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 this nervousness," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

The S&P energy index was down 0.7 percent, with shares of Exxon Mobil down 0.4 percent at $90.

Major Indexes End Lower

The Dow Jones industrial average (^DJI) fell 27.16 points, or 0.15 percent, to 17,613.68, the S&P 500 lost 5.23 points, or 0.26 percent, to 2,023.03 and the Nasdaq composite (^IXIC) dropped 3.21 points, or 0.07 percent, to 4,661.50.

The losses extended the recent decline to a third day. The S&P 500 is now down 3.2 percent since its Dec. 29 record high, marked by concerns about plunging oil prices, global economic weakness and Greece's potential exit from the eurozone.

A reduction in the amount to hedging in the market as shown by options on the CBOE Volatity index suggests some investors may be more exposed to big fluctuations in the stock market, said Joe Bell, senior equity analyst at Schaeffer's Investment Research in Cincinnati. The VIX ended the day up 4.9 percent at 20.56.

Earnings Season

Results have begun rolling in for U.S. quarterly earnings, though estimates have fallen sharply in recent months as oil prices sold off.

Goodyear Tire & Rubber (GT) stumbled 7.1 percent to $26.05 after the company estimated full-year operating income growth "slightly below" its forecast of 10 to 15 percent.

About 7.8 billion shares changed hands on U.S. exchanges, above the 7.2 billion average for the last five sessions, according to BATS Global Markets.

NYSE decliners outnumbered advancers 1,627 to 1,460, for a 1.11-to-1 ratio; on the Nasdaq, 1,393 issues fell and 1,326 advanced, for a 1.05-to-1 ratio favoring decliners.

The S&P 500 posted 57 new 52-week highs and 21 new lows; the Nasdaq Composite recorded 113 new highs and 105 new lows.

What to watch Wednesday:

  • At 8:30 a.m. Eastern time, the Commerce Department reports retail sales for December, and the Labor Department reports import and export prices for December.

  • The Commerce Department releases business inventories for November at 10 a.m.

  • The Federal Reserve releases its latest survey of regional economic conditions across the nation at 2 p.m.

These selected companies are scheduled to release quarterly financial results:

  • JPMorgan Chase (JPM)

  • Wells Fargo (WFC)

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