Stocks retreat as oil, gas prices gain

Stocks tumbled Tuesday as strength in the commodities market fed inflation fears and stifled investors’ enthusiasm over upbeat first-quarter earnings from Dow Jones industrial Alcoa Inc.

Although Alcoa’s better-than-expected profit gave Wall Street confidence about the upcoming earnings season — which kicks into full swing next week — traders were anxious that higher energy and commodities prices would cut into corporate profits and drive up material costs.

Jay Suskind, head trader for Ryan, Beck & Co., said that while energy prices have been steadily climbing over the past few weeks, political turmoil in Iran and Nigeria and forecasts for greater gasoline demand this summer are weighing on the market.

And as other commodities rise along with energy futures, the risk of higher prices being passed to consumers has investors again worried about more interest rates increases from the Federal Reserve, he said.

Wall Street faced a second day with no new economic reports to guide investors, who are closely monitoring government data for any hint of inflation. Reports on retail sales and consumer confidence are due later this week.

The Dow dropped 51.70, or 0.46 percent, to 11,089.63, its lowest close since finishing at 11,076.02 on March 13.

The broader stock indicators declined. The Standard & Poor’s 500 index lost 10.05, or 0.78 percent, to 1,286.57 — also a one-month low — and the Nasdaq composite index fell 22.92, or 0.98 percent, to 2,310.35.

Bonds rebounded from last week’s plunge, with the yield on the benchmark 10-year Treasury note slipping to 4.93 percent from 4.96 percent late Monday. The dollar was mostly lower against most major currencies; gold prices lingered near $600 per ounce.

Crude futures pushed higher as traders awaited news about the controversy over Iran’s nuclear arms program and violence in Nigeria. A barrel of light crude gained 24 cents to $68.98 on the New York Mercantile Exchange.

Energy traders also assessed an Energy Department outlook predicting retail gas prices will average about 25 cents more per gallon than last summer, but noting that the increase should not stifle demand. Gasoline futures gained 4.5 cents to $2.054 a gallon on the Nymex.

Declining issues led advancers by more than 3 to 1 on the New York Stock Exchange, where preliminary consolidated volume of 2.28 billion shares topped the 1.94 billion shares that changed hands on Monday.

The Russell 2000 index of smaller companies lost 10.84, or 1.44 percent, to 742.11.

Overseas, Japan’s Nikkei stock average fell 0.28 percent. Britain’s FTSE 100 dropped 0.83 percent, Germany’s DAX index tumbled 1.58 percent and France’s CAC-40 was lower by 1.5 percent.