Stocks pared losses in the final hour of trading on Tuesday amid a sell-off in energy and materials stocks, as commodities sank in the wake of a nearly eight percent decline in silver prices.
The Dow Jones Industrial Average fell about 10 points afteredging slightly lower on Monday, reversing earlier gains following news of Osama Bin Laden’s death.
Among Dow components, Pfizer and Chevron fell, while Alcoa and AT&T rose.
The S&P 500 fell, while the Nasdaq sank nearly 1 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market,rose to nearly 17.
Among key S&P sectors, energy and materials declined, while telecom advanced.
Commodities were in focus as silver futures tumbled nearly 10 percentat one point amid heavy volume. Silver futures for May delivery ended 7.6 percent lower at $42.58. The CME is raising margin requirements for silver after the market closes Tuesday. Gold also sank, falling more than 1 percent to close at $1,540.
The Dow Jones UBS Commodities Indexfell more than 1 percent.
Oil prices also sank. London Brent crude fell 2.13 percent to close at $122.45, while U.S. light crude fell 2.18 percent to $111.05.
The dollar, meanwhile, which is hovering near a three-year low against a basket of currencies, traded flat after starting the session higher.
Investors may be profit taking after a strong run-up in commodities prices, said Quincy Krosby, market strategist at Prudential Financial.
They are largely moving money into cash until they have a better sense of the market's direction, Krosby added.
"I think investors are watching to see where the dollar is headed, any direction from the (Federal Reserve) post-meeting, and global demand," she said.