Stock markets have fallen modestly today after reaching record highs over the past few days. The Dow Jones Industrial Index (DJINDICES:^DJI) is down 0.13% in late trading, and the S&P 500 (SNPINDEX:^GSPC) has dropped 0.38%. But the real fireworks were in the commodities market, where gold fell 4.2% and oil dropped 2.5% by 3:15 p.m. EDT.
The Fed is discussing the end of quantitative easing, and the stock market continues to rise, so the "safe haven" that gold bugs find comforting is getting a little less attractive by the day. A commodity like gold can quickly plummet when traders decide to sell: There's little fundamental use for gold, so it trades based more on sentiment and fear than on fundamental supply and demand, unlike other commodities.
Oil fell after the Thomson Reuters/University of Michigan consumer sentiment reading for April dropped to 72.3 in April from 78.6 in March. This is just a preliminary reading, but it's the lowest since last July, and it shows that the economy could be weakening.
Alcoa (NYSE:AA) has followed the drop in commodities, falling 1.5% today. Alcoa beat earnings estimates by a small margin earlier this week, but investors are taking a cautious approach to the stock now that we're past earnings. The company is fighting fear of an economic slowdown, as well as fear of a bear market for commodities, and those two factors will hang over the stock until economic conditions improve.
On the flip side, Home Depot (NYSE:HD) has rallied 2.3% after the company was upgraded by an analyst at Jeffries. This upgrade isn't a long-term driver of the stock, but it can bring in short-term buyers and help reinforce your investing thesis. The analyst thinks home investments will look attractive to home owners who are weary of low-yield, fixed-income investments and new record highs on the stock market. It was also announced that HD Supply has filed for an IPO. This former subsidiary of Home Depot is majority-owned by private-equity investors, but the 12% ownership stake Home Depot still holds could give the company an infusion of cash.
Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.