What happened

Shares in copper miner Freeport-McMoRan (FCX -1.97%) were down nearly 5% as of midday today. There are no prizes for guessing the main reason why. The price of copper, alongside a host of other industrially used commodities, declined again today. With the price of copper now trading at around $3.20 per pound, compared with $4.50 per pound at the start of June and $4.90 per pound in early March, it's clear that the market is selling off economy-sensitive commodities in fear of an upcoming recession.

So what

Another question is whether the 29% fall in the price of copper since early June is reflective of a change in underlying conditions or if it's really due to the flow of speculative money out of the "buy copper to profit from inflation" trade. 

Still, Freeport-McMoRan's management believes that, all things being equal, a $0.10 change in the price of copper impacts its earnings before interest, taxes, depreciation, and amortization (EBITDA) by $425 million. So it's understandable if the market reacts negatively. 

The question is whether the risk/reward calculation over the stock and the future price of copper justifies buying or selling the stock right now. Sentiment has turned negative on the so-called inflation plays like copper, but that could change as the market digests a higher interest rate environment. Meanwhile, the underlying case for copper is still intact, driven by long-term growth in its use in electric vehicles, renewable energy, and electrification trends in the economy. Moreover, Freeport-McMoRan is still highly profitable at the current copper price. 

Now what 

Markets are in a negative mood right now, and it could persist. That said, the long-term fundamentals for Freeport-McMoRan and copper remain positive, and it's only a matter of time before conditions stabilize.