Stocks just got cheaper. Are buyers still interested?

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Investors who’ve been hoping to buy stocks or commodities at lower prices are getting their wish.

Now, will they step up -- or keep waiting for better bargains?

The pullback in equity markets this month has been worldwide, with few exceptions, amid new jitters over the global economy’s turnaround prospects.

At Monday’s close, the U.S. Standard & Poor’s 500 index was down 5.6% from its spring high reached June 12. That isn’t much, but it’s the biggest decline since the rally began on March 10.

U.S. indexes of smaller stocks have lost between 7% and 8% from their recent highs, but they had posted bigger gains in the rally than the S&P 500.

The declines in many foreign markets have gotten closer to double-digit percentages, after the steep run-up of the last three months. The German market was off 8.8% through Monday from its spring high reached June 2. The Mexican market has lost 8.4% from its high.

The biggest loser so far has been the commodity-dependent Russian stock market, which dove 7.8% in Monday’s global sell-off, leaving it down 22% from its spring peak on June 1.

As for commodity prices, oil fell $2.62 to $66.93 a barrel on Monday. It’s down 7.9% from its eight-month high of $72.68 reached June 11. Wheat futures have tumbled 19% since June 1. The popular Pimco Commodity Real Return mutual fund is down 9.1% in the last seven sessions.

To hear the bulls tell it, there have been huge numbers of investors on the sidelines for the last three months, all eager to put money to work in stocks and commodities in anticipation of an economic upturn later in 2009. They’ve just been waiting for the first significant pullback in those markets to get a better deal, or so the thinking goes. . . .

And with the end of the second quarter a week away, this is about the time that ‘window dressing’ should kick in: buying by money managers who want to add to some of their big winners for the quarter, giving their portfolios an extra boost before they report results to clients. But with doubts about the economy resurfacing, the question is whether potential buyers will easily lose their appetite for risk-taking, even at discounted prices.

If you believe that this is a new bull market, even a short-lived one, it wouldn’t be unusual to see a drop of 10% to 15% in major indexes before buyers take control again. That would be a classic, and healthy, ‘correction.’

The fear is that a drop of 15% could quickly turn into something much worse if investors, still deeply scarred by the fall and winter market calamities, run en masse for the exits as they see the spring rebound melt away.

-- Tom Petruno