U.S. stocks slid on Monday as retreating commodity prices drove a selloff in the shares of natural resource companies, while Goldman Sachs' downgrade of Wal-Mart Stores Inc
Technology shares, which were among the market's biggest gainers in a rally from the 12-year lows of early March, also fell heavily.
It seems to me what's going down the most is the stuff that's gone up the most. There's been enormous moves both in equities and in commodities recently, said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
A lot of people have had nice profits, and if the trade is over they want to exit the trade. Of course, that may change this afternoon or tomorrow.
The Dow Jones industrial average <.DJI> dropped 209.65 points, or 2.38 percent, to 8,589.61. The Standard & Poor's 500 Index <.SPX> tumbled 23.23 points, or 2.46 percent, to 922.98. The Nasdaq Composite Index <.IXIC> slid 53.30 points, or 2.87 percent, to 1,805.50.
Data showing that manufacturing in New York state shrank in June at a more severe rate than forecast also gave investors pause. Even though there has been some signs that the economy may be stabilizing, investors are looking for more definitive signals that the recession is moderating.
Wall Street's losses extended a global sell-off that rippled across equity markets in Asia overnight and drove European stocks down more than 2 percent as the appetite for riskier assets ebbed.
Exxon Mobil Corp
Shares of Newmont Mining
The semiconductor index <.SOXX> lost 3.4 percent.
Goldman Sachs cut its rating on Wal-Mart to neutral from buy, saying it did not see a lot of positive catalysts to drive shares higher in the near-term as expense pressures and tougher sales comparisons persist.
Shares of Wal-Mart, a Dow component, fell 2.7 percent to $48.50.
While the recent run-up in commodities helped equities add to their recent recovery, there has also been concern that a continued surge in commodity prices would stoke inflation pressures and hamper an economic recovery. Higher energy costs are a drag on consumer spending and corporate profitability.
The pullback in commodity prices coincided with a rebound in the U.S. dollar following Russian comments expressing confidence in the U.S. currency. But traders kept a close watch on OPEC member Iran, where contested election results sparked a weekend of violent protests.
Including Monday's early declines the benchmark S&P 500 index's gains from the March low stands at 37 percent.
(Editing by Padraic Cassidy)