[markets] stocks higher, commodities fall inc. oil

With prices for commodities dropping, particularly crude oil, investors sold stock in companies including Exxon Mobil Corp. and aluminum maker Alcoa Inc., theorizing that other companies will now be paying less for raw materials, a trend that will help preserve corporate profits. Moreover, a decline in commodities could portend a drop in inflation.

Also lifting stocks was a speech from St. Louis Federal Reserve President William Poole, who said he believes inflation is 'pretty well controlled.' His comments soothed some of the market's concerns about interest rates ahead of the Federal Reserve's meeting on Sept. 20.

'The drop in oil prices is becoming a catalyst, as is other commodities, and giving people confidence to put money into areas that have somewhat been lagging such as technology,' said Scott Fullman, director of investment strategy for Hapoalim Securities. 'Investors have been in commodity-based stocks, and you're seeing a reallocation of capital within the market.'

He believes this will 'continue unless its given a reason to reverse that trend, like if energy prices begin to rise again.'

Oil fell as OPEC said it would continue pumping crude at high rates to extend global supplies. The price of light sweet crude fell 35 cents to $65.90 per barrel on the New York Mercantile Exchange, marking the sixth-straight day of declines.

Exxon Mobil fell $1.46, or 2.2 percent, to $65.35, while Alcoa fell $1.29, or 4.5 percent, to $27.39.

There continue to be questions that the Fed went too far with 17 straight rate increases over two years, and that a soft landing of the economy might be harder to achieve. Investors have been gauging a series of economic reports during the past few weeks, and speeches by Fed officials, to determine what the central bank might do later this month.

Joe del Bruno The Associated Press