U.S. stocks fell on Monday, as investor grew concerned over rising inflation, sending shares of Exxon and Caterpillar lower.
Among major U.S. indexes, the Nasdaq Composite Index closed down 61.28 points, or 2.32 percent, at 2,574.46. The Dow Jones industrial average fell 172.65 points, or 1.29 percent, to end at 13,167.20. The Standard & Poor's 500 Index was down 22.04 points, or 1.50 percent, to finish at 1,445.91.
Exxon Mobil Corp., the largest U.S. oil company, and Freeport-McMoran Copper & Gold Inc., the world's second-largest copper miner, declined as fuel and metals prices also dropped. Exxon lost $1.29 to $89.89 after oil fell for a third day on concern inflation and subprime mortgage losses will hinder economic growth. Freeport-McMoran shares fell $7.20, or 7.1 percent to $94.91 as copper prices reached a nine-month low.
Concerns of a possible recession weighed on construction equipment-maker Caterpillar Inc., which was downgraded by Morgan Stanley. Shares dropped 3 percent to $71.16, the lowest since November 27 after Morgan Stanley said construction-equipment sales would slow in 2008.
U.S. Federal Reserve has been attempting to boost the economy in the last several months by lowering borrowing costs. However, recent economic data has shown higher consumer and wholesale prices, which may diminish the Fed's appetite to continue reducing rates.
The possibility of less rate cuts ahead, and reports that the economy has not slowed down has driven the U.S. dollar higher. Investors in commodities such as fuel and metals, who had fled the dollar when it was falling, are now pulling out their investments in commodities.