* Dollar surges in late trade, gold retreats from highs
* Banks, metal stocks weigh on market
* Dow down 0.5 pct, S&P off 0.8 pct, Nasdaq off 0.7 pct
* For up-to-the-minute market news see []
(Updates to close; changes byline)
By Angela Moon
NEW YORK, Nov 9 (Reuters) - Wall Street fell for a second
day on Tuesday as selling accelerated into the close, led by
sharp losses in bank and metal stocks.
Metals stocks, which had been the market's standout
performers, gave up earlier gains after the price of gold and
silver fell sharply late in the day and the dollar
strengthened.
Financial stocks took a hit as interest rates rose late in
the day.
"Commodities were very strong this morning and the
leaders of the market," said Nick Kalivas, senior equity index
analyst at MF Global in Chicago.
"As the dollar firmed through the day it's undercut some
of that commodity strength."
An index of gold and silver miners' shares <.XAU> fell
2.6 percent after hitting an all-time high earlier in the day.
Shares of the iShares Silver Trust <SLV.P>, an exchange-traded
fund that tracks the price of silver, fell 3.6 percent on
massive volume as more than 150 million shares changed hands,
nearly 10 times the average daily volume over the last 50
days.
The silver ETF fell 3.6 percent. Earlier in the day, CME
Group said it was increasing the margin requirements for silver
futures contracts to $6,500 from $5,000. The price of silver
fell from a 30-year high earlier in the day.
"The down move was most likely in response to the CME
raising margin requirements on silver futures contracts," said
Steve Place, a founder of investingwithoptions.com in Mobile,
Alabama, in reference to the nearly 30 percent increase in
margin requirements for silver futures.
"As there was a lot of speculative money in silver," he
added, "this led to leveraged longs being forced to sell to
reduce margin exposure. This supply fed on itself, which in
turn, led to sharp selling across the board in the precious
metals futures complex."
The Dow Jones industrial average <> slid 60.09 points,
or 0.53 percent, to 11,346.75. The Standard & Poor's 500 Index
<.SPX> dropped 9.85 points, or 0.81 percent, to 1,213.40. The
Nasdaq Composite Index <> lost 17.07 points, or 0.66
percent, to close at 2,562.98.
Early in the day, U.S. gold futures <GCZ0> hit a record
$1,424.30 an ounce. It was a fourth straight day of record
levels.
The dollar index <.DXY>, on the other hand, rose about 1
percent against a basket of major currencies in late afternoon
trade.
Financial stocks, which helped drive gains last week, led
the S&P 500's decline for a second day. The S&P financial index
<.GSPF> slid 2.2 percent. Bank of America <BAC.N> fell 2.7
percent to $12.27, weighing the most on the Dow industrials.
Real estate investment trusts, or REITs, "are a yield play,
to a degree, and you see yields are moving higher today,
actually aggressively higher," said Rick Campagna, portfolio
manager at 300 North Capital LLC in Pasadena, California.
"You look at the long bond, or any of the bonds, all of the
rates are up, so bonds are down. So to the extent that people
are looking at the REITs (real estate investment trust) as a
yield play, there is some correlation there."
The S&P 500 added 3.6 percent last week, its fifth straight
week of gains.
Investors came into the week ready to book profits from the
rally that took stocks last week to their highest levels since
September 2008 after the Federal Reserve's announcement of its
stimulus plan to help the ailing economy. The dollar, which has
had an inverse relationship with stocks lately, fell to
multi-month lows.
"We basically had a straight line up (in stocks) since
September and we didn't even have a 2 percent or more
correction yet. I think the dips are actually healthy for the
market," said Stephen Massocca, managing director in Wedbush
Morgan in San Francisco.
The market's recent strong run higher has pushed the S&P
500 up to near resistance around the 1,228 level, which would
retrace 61.8 percent of the decline between its highs in 2007
and the 12-year low in March 2009.
This point, a Fibonacci retracement, is closely followed by
technical chartists and often triggers buying or selling.
Investors have seen gold as an inflation hedge following
the Fed's announcement last week that it would buy $600 billion
in government debt in an effort to stimulate the sluggish U.S.
economy, and the view has bolstered commodity shares.
Deal news supported shares of Yahoo Inc <YHOO.O>, up 3.2
percent at $16.97, after a report it may be a takeout target.
[]
Elsewhere on the merger front, Atlas Energy Inc <ATLS.O>
surged 34 percent to $42.50 after Chevron Corp <CVX.N> said it
will buy the U.S. natural gas producer, giving Chevron a stake
in the fast-growing Marcellus shale field. For details, see
[]
Chevron slipped 1.5 percent to $83.56 and was the top drag
on the Dow. []
Volume was light, with about 8.9 billion shares traded on
the New York Stock Exchange, the American Stock Exchange and
Nasdaq, below the year-to-date daily average of 8.72 billion.
About 11 stocks fell for every 4 that rose on the New York
Stock Exchange, while on the Nasdaq, about 19 stocks fell for
every 7 that advanced.
(Reporting by Angela Moon; Additional reporting by Doris
Frankel; Editing by Jan Paschal)
