A strengthening dollar and worries about an overheated market hit stocks today.
Shares started the day higher but turned sharply lower mid morning as interest rates rose and a rebound in the value of the dollar stalled a rally in commodities.
Early gains in prices for oil and other commodities had pushed up shares of energy and materials companies.
The sharp swings in currency and commodity markets sent the Dow Jones industrial average whipsawing in a 200-point range, surrendering an early advance for a loss of 104 points. Stocks have fallen in four of the last five days.
Oil gave up early gains to slide $1.82 to $78.68 per barrel on the New York Mercantile Exchange. That hurt the shares of major oil companies such as ConocoPhillips.
Changes in the dollar’s value against other currencies like the euro or Japanese yen frequently send commodity prices up or down. Since most commodities are priced in dollars they become more attractive to non-US investors when the dollar is weak, and more expensive when the dollar is strong.
Analysts also said some investors are looking to pocket gains after a stock market run that has stretched nearly eight months and brought share prices to their highest levels in a year last week.
Technology shares fared better than other parts of the market after Marvell Technology Group, which makes chips used in phone networks, raised its fiscal third-quarter revenue forecast. That helped the technology-focused Nasdaq composite index limit its losses. RadioShack’s third-quarter sales topped expectations, helping retailers.
Richard Ross, global technical strategist at Auerbach Grayson in New York, said the direction of the dollar as well as volatility continues to drive trading. “You’re seeing this sort of waltz between the dollar and volatility and stocks,” Ross said.
The Dow fell 104.22, or 1.1%, to 9,867.96.
The broader Standard & Poor’s 500 index fell 12.65, or 1.2%, to 1,066.95. The index, which is the basis for many mutual funds, is down 2.8% from its recent peak a week ago.
The Nasdaq fell 12.62, or 0.6%, to 2,141.85.
About three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1.4 billion shares compared with 1.3 billion Friday.
Stocks fell Friday after a rise in the dollar hurt commodity prices. The Dow lost 0.2% last week, while the S&P 500 index fell 0.7%.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.57% from 3.49% late on Friday. It was the first time since late August that the yield topped 3.50%.
The dollar rose against most other major currencies, while gold fell.
Financial stocks posted some of the biggest losses as an influential analyst lowered his ratings on some regional banks and as traders worried about what might happen if regulators try to impose rules on the size of financial institutions.
“We’re seeing legislation in Washington drive trading,” said John Brady, senior vice president of global interest rate products at MF Global in Chicago.
Meanwhile, Rochdale Securities bank analyst Richard Bove lowered his ratings on Fifth Third Bancorp, SunTrust Banks and US Bancorp. Fifth Third fell $0.82, or 7.9%, to $9.52 and SunTrust slid 1.14 dollars, or 5.4%, to $19.85. US Bancorp fell 80 cents, or 3.2%, to $24.15.
Among oil companies, ConocoPhillips sank $1.23, or 2.4%, to $50.74 dollars.
In other trading, Marvell rose 41 cents, or 2.8%, to $14.99, while RadioShack rose 2.49 dollars, or 15.9%, to 18.15 dollars.
The Russell 2000 index of smaller companies fell 7.18, or 1.2%, to 593.68.