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NEW YORK (TheStreet) -- Dry-bulk stocks were under pressure Thursday as investors and traders, inspired by the broader market selloff, fled all sorts of risky plays -- for which shipping equities certainly qualify.

Mike Bellafiore, a trader and partner at SMB Capital, said "risk aversion" has suddenly become a factor again. Beaten-down shares of dry bulkers had staged a minor late-summer rally, especially


(DRYS) - Get Free Report

, the most widely traded among shipping issues, as investors sought to put money to work. But now, Bellafiore said in an email, market participants are "

moving out speculative names and into more defensive positions."

From a fundamental perspective, investors may have been reacting, at last, to a precipitous drop in shipping rates that's been ongoing for about the last two weeks, posited Natasha Boyden, a research analyst with Cantor Fitzgerald.

According to the Baltic Exchange, the London-based shipping brokerage, rates for Capesize ships, the biggest dry-bulk haulers on earth, had fallen below the $23,000-a-day level, which is nearly break-even for ship owners.

Even as those rates tumbled, equities in the sector had risen sharply. DryShips, for example, had gained 43% from the beginning of September until late last week, when the stock began to slide.

Michael McDonough,


resident shipping-sector observer, said in an email that many investors are equating economic recovery with a run-up in dry-bulk stocks. In normal times, McDonough says, this may be true. But with a well-documented slate of newly built vessels coming into service, a glut may well be developing, which would weigh on company profits as well as share prices.

In just the last few days,

Navios Maritime Holdings

(NM) - Get Free Report


Genco Shipping & Trading

(GNK) - Get Free Report

both announced the delivery of a newly constructed ship.

There's some irony here: Capesize rates finally found stability Thursday. The going rate for a capesize vessel, the biggest dry-bulk haulers on earth, posted its first gain, 0.6%, in a long time, as shipping owners refused to let out their ships at below break-even levels.

On Thursday, Capesizes were going for $22,251 a day, up from $22,109 on Wednesday. Still, those rates are still down nearly 24% for the week.

Among the larger dry-bulk names Thursday, shares of DryShips paced the declines, losing nearly 6% to $6.54.

Diana Shipping

(DSX) - Get Free Report

fell 4.4% to $12.54;

Safe Bulkers

(SB) - Get Free Report

shed 5% to $7.80; Genco was down about 4% to $20.09; and

Eagle Bulk

(EGLE) - Get Free Report

dropped 5.3% to $5.19.


Excel Maritime


, Navios Maritime and

Star Bulk Carriers

(SBLK) - Get Free Report

all declined about 5% apiece. Smaller players


(FREE) - Get Free Report




gave up the most percentage-wise, declining about 7% and 8%, respectively.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.