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US STOCKS-Wall St drops 1 pct on oil's fall, Alcoa's revenue

Published 04/12/2011, 01:26 PM
Updated 04/12/2011, 01:32 PM
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* Oil prices sink, hitting energy stocks

* Alcoa Q1 revenue misses estimates, stock slides

* Japan raises nuclear crisis level to same as Chernobyl

* Dow off 1 pct, S&P off 0.9 pct, Nasdaq off 1 pct (Updates to afternoon trading)

By Ryan Vlastelica

NEW YORK, April 12 (Reuters) - U.S. stock indexes slid 1 percent on Tuesday as oil prices sank and Alcoa's leaner-than-expected revenue started the earnings season on a disappointing note.

Energy stocks turned in the worst performance, with the S&P Energy Index losing 3.2 percent alongside oil prices. U.S. crude futures fell 3.4 percent to $106.18 per barrel while Brent crude dropped 2.4 percent to $121.05. Dow component Chevron Corp dropped 3.2 percent to $104.32.

Goldman Sachs shook oil markets for a second day after it called for a fall of almost $20 in the price of Brent crude oil in coming months.

"There's growing recognition that the recovery is fragile in a lot of ways, and that we can't totally rely on demand from China, India or Brazil to keep us rising," said Randy Bateman, who helps oversee $14.5 billion as chief investment officer of Huntington Asset Management in Columbus, Ohio.

"Energy stocks are recognizing that, and investors looking to take profits are taking them there."

The International Energy Agency also said high prices could curb oil demand. U.S. crude is up about 16 percent since the start of the year. For details, see [ID:nN12221543]

Alcoa Inc slid 6.6 percent to $16.60 and was the Dow's biggest percentage loser a day after it reported revenue that missed forecasts, though its profit topped consensus expectations.

"Everyone is looking at revenue this quarter since that will show the strength or fragility of the recovery," Bateman said. "People were looking for stronger revenue growth."

The Dow Jones industrial average was down 119.28 points, or 0.96 percent, at 12,261.83. The Standard & Poor's 500 Index was down 11.66 points, or 0.88 percent, at 1,312.80. The Nasdaq Composite Index was down 26.51 points, or 0.96 percent, at 2,745.

Analyst Tony Robson of BMO Nesbitt Burns Inc cut his rating on Alcoa's stock to "underperform," saying in a note it was "mostly on expectations of a weaker aluminum price in the quarters ahead."

The SPDR S&P Metals and Mining ETF fell 2.1 percent.

Japan raised the severity of the Fukushima nuclear power plant accident to the highest level on the International Nuclear and Radiological Event Scale, putting it on par with the Chernobyl 1986 disaster. Dollar-denominated Nikkei future fell 1.2 percent.

Mining stocks fell as metals prices dipped on worries that Japan's massive earthquake and a nuclear crisis would weaken recovery prospects in the world's third-largest economy.

The S&P Materials Index fell 1.3 percent while U.S.-traded shares of Rio Tinto fell 2.1 percent to $72.26. Freeport-McMoRan Copper & Gold Inc shed 3.3 percent to $53.63.

On the upside, Tibco Software Inc climbed 5 percent to $28.35 a day after Reuters reported that Hewlett-Packard Co had considered buying the business software maker to strengthen its software division. (Reporting by Ryan Vlastelica; Editing by Jan Paschal)

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