Stocks Falter, Commodities Jump

A rally in U.S. stocks fizzled in the final hour of trading Tuesday, as Wall Street was unable to build on a snap-back in battered foreign markets.

The blue-chip Standard & Poor’s 500 lost 5.49 points, or 0.4%, to 1,256.58, its lowest close since Feb. 7. The index’s year-to-date gain has been slashed to 0.7%. It was up 6.2% as of May 5, when it hit a five-year high.

Stocks were higher for most of the day as rebounding prices for oil, copper, gold and other commodities pulled up natural-resources shares. But the broader market couldn’t sustain the advance.

The Dow Jones industrial average ended with a loss of 26.98 points, or 0.2%, at 11,098.35. It had been up 77 points earlier in the day.

The tech-heavy Nasdaq composite index sank 14.10 points, or 0.6%, to 2,158.76, its 10th drop in 11 sessions. It is down 8.9% from its recent high.

Losers topped winners by about 5 to 4 on the New York Stock Exchange.

Traders said a report of possible human-to-human transfer of bird flu in a cluster of Indonesian cases may have contributed to the market’s decline.

“People are looking for a reason to sell these days,” said Thomas Garcia, head of trading at Thornburg Investment Management in Santa Fe, N.M.

Stocks have been under pressure worldwide since May 11, one day after the Federal Reserve raised its benchmark short-term interest rate for a 16th time since mid-2004 and warned that it might tighten credit further to quash inflation.

Some investors fear that the Fed could slow the economy enough to risk a recession. Interest rates also have been rising this year in Europe, Canada and China, and Japan is expected to begin tightening credit this year.

The Dow has tumbled 544 points, or 4.7%, since reaching a six-year high May 10. Many foreign markets have fallen more sharply on rate worries. Those concerns boiled over Monday, triggering steep slides overseas.

But buyers returned to many of those markets Tuesday. The Russian RTS market index jumped 6.8% after tumbling 9% on Monday. The Indian Sensex index rose 3.2% after a 4.2% loss in the previous session.

“The market has found some confidence,” said Cyrus Golpayegani, a fund manager at Raiffeisen Capital Management in Vienna.

Jonathan Garner, head of emerging-market strategy at Credit Suisse Group, recommended that clients take advantage of the plunge in emerging markets to buy Brazilian, Russian and Taiwanese shares. “The storm is over,” he said.

Most European markets also rebounded. The German DAX index jumped 2.4% after sliding 2.2% on Monday.

But Japan’s market continued to slide. The Nikkei-225 index fell 1.6% to 15,599.

Wall Street’s inability to close in the black disappointed traders. Some said investors were skittish before the release of key economic data, including today’s report on April durable-goods orders and a report Friday on April personal spending.

Friday’s report also will include an inflation gauge watched closely by the Fed.

In commodities trading Tuesday, near-term oil futures jumped $1.80 to $71.76 a barrel in New York. Copper futures in New York rocketed 43.55 cents to $4.07 a pound, a record 12% surge, as the metal appeared to resume its stunning rally of the last few months after a sell-off last week.

“We are seeing very good economic conditions around the world.” said Charles Goodyear, chief executive of BHP Billiton, the world’s largest mining company. “The supply side [for metals] is still struggling to keep up.”

Gold futures jumped $16 to $673 an ounce. Silver shot up 74.5 cents to $13.10 an ounce.

In other trading, Treasury bond yields declined as some investors continued to favor bonds. The 10-year T-note dipped to a four-week low of 5.02% from 5.04% on Monday.

Among the day’s highlights:

* Mining firms led natural-resources shares higher. Phelps Dodge jumped $3.26 to $83.06 and Rio Tinto rallied $6.49 to $211.49. In the gold sector, Goldcorp gained 48 cents to $30.68, but still is down 25% from its record high reached May 10.

* Many energy stocks gained with higher oil prices. Baker Hughes rose $1.65 to $80.90, Suncor Energy added $2.45 to $78.23 and BP climbed 56 cents to $70.75.

* On Nasdaq, the government’s widening investigation of stock option grants to executives hurt shares of Juniper Networks, Brooks Automation and F5 Networks, after the companies said they were included in the probe. Juniper slid 46 cents to $15.03, Brooks dropped 31 cents to $12 and F5 plunged $4.07 to $48.28.

* Among new stock issues, Internet phone service provider Vonage priced its initial offering at $17 a share, raising $531 million. The stock will begin trading today on the NYSE under the ticker symbol VG.