By Lewis Krauskopf
NEW YORK (Reuters) - Copper prices fell steeply to their lowest point in two months on Tuesday, while technology stocks rebounded following a rotation away from the high-flying group as investors assessed a U.S. tax-cut proposal.
Copper (CMCU3) lost 4.35 percent to $6,529.00 a tonne as inventories rose, its biggest single-session decline in more than two years. Other metals, such as nickel (CMNI3) and zinc (CMZN3), also fell.
Copper prices were also pressured by recent strength in the dollar, with many commodities denominated in the U.S. currency.
Copper is a signal of global demand, and Tuesday's decline comes at a time when other data point to economic strength, said William Delwiche, investment strategist at Baird in Milwaukee.
“Today is copper traders questioning whether or not global growth is as strong as they were thinking," Delwiche said. "They are looking at the inability of bond yields to make a sustained move higher and causing them to question the strength in the economy.”
On Wall Street, the Dow Jones Industrial Average (.DJI) fell 19.99 points, or 0.08 percent, to 24,270.06, the S&P 500 (.SPX) gained 1.99 points, or 0.08 percent, to 2,641.43 and the Nasdaq Composite (.IXIC) added 33.37 points, or 0.49 percent, to 6,808.73.
The S&P technology sector (.SPLRCT), which has lost momentum in recent days, rose 0.8 percent and was the best performing major group.
Investors have been selling technology shares recently, bidding up prices for banks, telecoms and transports in a rotation into groups expected to particularly benefit from passage of U.S. bill designed to slash corporate taxes.
The Republican-controlled U.S. House of Representatives voted on Monday to go to conference on tax legislation with the Senate, moving Congress another step closer to a final bill.
"Expect the next two or three days for the market to behave irrationally," said Massud Ghaussy, director at Nasdaq Advisory Services. "A lot of changes are being made to the tax bill and it obviously impacts various sectors in different ways."
In Europe, the pan-European FTSEurofirst 300 index (.FTEU3) lost 0.12 percent, after posting its biggest gain in more than a month on Monday.
Europe's STOXX 600 technology index (.SX8P) rose 0.6 percent.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.10 percent.
The dollar rose for a second straight session as the currency continued to benefit from optimism surrounding U.S. tax reform.
The dollar index (.DXY) rose 0.29 percent, with the euro (EUR=) down 0.53 percent to $1.1801.
Benchmark 10-year notes
Oil rose, supported by strong demand, expectations of a drop in U.S. crude inventories and an OPEC-led deal to extend oil output cuts.
U.S. crude (CLcv1) rose 0.45 percent to $57.73 per barrel and Brent (LCOcv1) was last at $62.93, up 0.77 percent on the day.
Spot gold (XAU=) dropped 1.1 percent to $1,262.33 an ounce.
(Additional reporting by Dion Rabouin in New York, Rama Venkat Raman and Sruthi Shankar in Bengaluru; Editing by Catherine Evans and Nick Zieminski)