Stock Market Takes Biggest Drop This Year

NEW YORK (AP) —

A steep fall in commodity prices led the stock market to its worst day this year on Monday, as worries about the global economy resurfaced.

The Dow Jones industrial average dropped 265 points, its biggest loss in five months.

The first trigger came from China. News that the world’s second-largest economy slowed unexpectedly pummeled oil, copper and other commodities. In the stock market, companies that produce oil and mine for metals fared the worst. A slowdown in China, a huge importer of basic materials like copper, would stymie profits at those companies.

“The weak data out of China is spooking a lot of investors,” said Dan Greenhaus, chief global strategist at the brokerage BTIG.

Oil prices hit their lowest level since mid-December, and gold plunged below $1,400 an ounce for the first time in two years as a sell-off in metals continued from last week. Concerns that Cyprus and other troubled European countries may sell gold to raise cash have also weighed on prices for precious metals, Greenhaus said.

The Dow lost 265.86 points to close at 14,599.20, a drop of 1.8 percent. Caterpillar, a maker of heavy equipment used by miners, led the Dow lower, falling 3 percent to $82.27. The Standard & Poor’s 500 index slumped 36.48 points to 1,552.37, a loss of 2.3 percent.

It was the biggest drop for the stock market since Nov. 7 — Election Day — last year.

China’s economy expanded 7.7 percent in the first three months of the year, well below forecasts of 8 percent or better. That news pummeled copper, oil and other commodities. Crude oil slid $2.58 to finish at $88.71 in New York trading

The plunge in commodity prices hit mining and energy stocks. Cliffs Natural Resources lost 8 percent to $17.61. Freeport-McMoRan Copper & Gold fell 8 percent to $29.27, the worst drop in the S&P 500. Analysts at Citigroup placed a “sell” rating on the mining giant on the expectation that copper prices will continue sliding.

Of the 10 industry groups in the S&P 500, materials and energy stocks fared the worst, losing 4 percent. Indexes of small companies and transportation stocks, which are more vulnerable to swings in the economy, also fell 4 percent.

The Nasdaq composite fell 78.46 points, or 2.4 percent, to 3,216.49.

Gold prices dropped $140 to $1,361 an ounce, a 9 percent fall. Gold has now slumped $203 an ounce over the past two days.

Frank Fantozzi, CEO of Planned Financial Services, a wealth management firm, says people had bought gold since the financial crisis on the belief it was safe place to keep money. But now that the metal has slid 20 percent this year, they’re jumping out.

“I think you’re getting some panic selling right now” in the gold market, said Fantozzi. “People who have been holding on to gold expecting a rebound are now thinking, ‘I better get out.’”

Sprint Nextel jumped after Dish Network offered $25 billion to buy the company. Dish’s bid is aimed at beating an offer from the Japanese phone company SoftBank. Sprint surged 14 percent to $7.06, and Dish fell 2 percent to $36.77.

Thermo Fisher Scientific offered $13.6 billion to buy genetic testing equipment maker Life Technologies. That works out to $76 in cash for each share of Life Technologies. Thermo Fisher’s stock fell 1 percent to $78.58, while Life Technologies rose 7 percent to $73.11.

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