Stocks Take Another Smackdown

Remember gold? Silver? Oil? Those darlings of commodity speculation?

You must, because it was only last week that long-term — or all-time — highs — were being set in each commodity, in some cases on a daily basis.

For now, those days are over as another round of selloffs took place on Thursday across virtually every geographic region and asset class.

The Dow Jones Industrial Average fell 139 points to 12,584, the Nasdaq dropped 14 points to 2815 and the S&P 500 lost 12 points to 1335.

For stocks (as measured by the S&P 500), the selloff marked a retreat to levels of about a month ago, and back with a frequent trading range of the past three months. That’s correct — stocks are flat since mid-February.

That large-cap yardstick also is significant since it marks a second straight day of big stocks losing more than small stocks — and tech stocks, for that matter. The Russell 2000 Index lost only 0.4% on Thursday.

A large part of attention revolved around the huge selloff in oil — settling below $100 for the first time since March 16. A few hard economic numbers on Thursday were thrown into the negative momentum mix to keep oil prices moving lower. Disappointing economic and corporate data from England had that country’s stocks staging a significant selloff, although the rest of Europe as a whole managed to rally for only a small dip in equities.

Of course, the larger effect was to bring into question what sort of demand oil producers could be expecting in the near term. A China PMI services reading that was flat and a rise in weekly job claims in the U.S. didn’t help matters.

As one would expect, precious-metals stocks were pounded (silver has now dropped more than 25% from its recent 31-year high), as were oil-related stocks. Exxon Mobil (NYSE:XOM), for example, has dropped 6% this week.

The few winning sectors were those tied directly to lower oil and gas prices — airlines and recreational services. American Airlines parent AMR Corp. (NYSE:AMR) and Delta Air Lines (NYSE:DAL) both gained more than 7%, while Royal Caribbean Cruises (NYSE:RCL) gained 6.7%.

Also notable is the 10-year Treasury note yield, which closed at 3.17%, its lowest level of the year, after showing a steady downtrend for the past three weeks — perhaps an early warning that not all was hunky-dory in financial markets?

And so we come to Friday’s jobs report as likely the biggest factor in determining whether this four-day selloff in stocks completes a “perfect” week — or gives commodity producers even more reason to fret long-term demand.