Like Mardi Gras revelers waking up with a hangover, equity investors couldn't quite decide whether to shake off last week's decline Monday and go for another drink, or to pull the covers back over their heads and hide. The picture was much clearer in the commodities sector, where heavy selling might lead some speculators to hit the bottle tonight.

Highlighting the uncertainty gripping stocks, the

Dow Jones Industrial Average

spent most of the afternoon down but ended the day up 47.48 at 11,428. After trading as low as 1,284.51 intraday, the

S&P 500

ended up 3.26 at 1,294. The


fell for a fifth straight session, down 5.26 to 2,238, but off its intraday low of 2,220.50.

With the benefit of hindsight, the selloff at the end of last week may be more about the absence of factors fueling more of a rally, rather than the presence of factors driving a decline. The economy is still strong, and there are no new data to blame for pushing inflation fears over the edge, although crucial inflation data this week will test the

Federal Reserve's

data dependency.

But peel back strong first- quarter corporate earnings and remove the obsession over whether the Fed would signal it is "one and done," and the market has rising interest rates and a falling dollar to swallow.

"It is the economic strength giving the stock market the problem," says Charles Blood, director of strategy research at Brown Brothers Harriman. "The stronger the economy, the higher rates go up. The strong economy is good for companies and earnings, but it means higher borrowing costs. It becomes a race between the earnings and the interest rates."

While Friday's weaker-than-expected consumer sentiment report only fueled the negative sentiment, stocks found some relief in Monday's weaker-than-expected New York Empire State index and a 2.1% drop in existing-home sales in the first quarter, as reported by the National Association of Realtors. More specifically, stocks benefited from the relief in selling pressure on Treasuries and the dollar. The 10-year Treasury bond rose 11/32, its yield falling to 5.16%.

Commodities and related stocks, conversely, declined sharply.

"It is a rainy day in sunny commodity land,

but supply and demand fundamentals are still intact for most basic commodities," says Margaret Patel, manager of the Pioneer Equity Opportunity Fund. "Having ridden a lot of these themes a long way, the market is nervous. It is just what happens."


StreetTracks Gold Trust

(GLD) - Get Report

exchange-traded fund dropped 5.2% to $67.43 as the price of gold dropped 3.8% to $685 per ounce.



fell 9.24%, and

Harmony Gold Mining

(HMY) - Get Report

dropped 8.53%, pacing a 6.1% decline in the Amex Gold and Silver Index. The price of silver fell 6.3% to close at $13.35 per ounce, while the

iShares Silver ETF

(SLV) - Get Report

dropped 7.2% to $134.21 per share.

The price of oil also continued to drop. It closed below $70 per barrel Monday, partially because OPEC officials said over the weekend that supply is running well ahead of demand. Light sweet crude fell $2.63 per barrel to close at $69.41. Among energy stocks,


(HAL) - Get Report

fell 2.36%, and

BJ Services


slid 5.3%.

Among other commodity-related stocks,


(AA) - Get Report

dropped 3.82% to $33.48.

A big correction in commodities is not far-fetched, given the amount of speculative money in the sector and given the huge expectations for the sector, says John Hill, Citigroup metals analyst. "We would regard a 20% correction as an intermediate top, and an opportunity, rather than a portent of 'the beginning of the end.'"

The dollar's weakness helped fuel the recent commodities rally, and the greenback's relative stability Monday contributed to weakness in the raw goods. Negativity surrounding the dollar eased -- for one day at least -- after Chinese monetary authorities set yuan trading levels below 8 vs. the dollar for the first time.

The factors behind the dollar's recent weakness are still in play. Asian central banks' plans to tighten monetary policy may be a foil to the risks taken the past few years amid seemingly unlimited liquidity. Increasingly, foreign central banks are directing their financial resources away from U.S. securities and into their own expansions or so-called alternative assets.

The U.S. Treasury's International Capital Systems (TIC) data report Monday may be first moment of truth regarding fears about waning demand by foreign investors for U.S. securities. The TIC data, which measures foreign purchasing of U.S. securities and U.S. purchases of foreign securities showed a net $69.8 billion of foreign investment in March, weaker than the $71 billion 12-month average. December and January's data also showed weakness, so February's strong report turned out to be an outlier, says Greg Anderson, director of FX Strategy at ABN Amro.

"There's obviously not going to be too much purchasing of U.S. securities going on in April," says Anderson, noting the recent weakness in the dollar and bearish conditions in U.S. Treasuries.

Stock market investors sought safe haven Monday in some traditional blue-chips like


(PFE) - Get Report


Johnson & Johnson

(JNJ) - Get Report


General Electric

(GE) - Get Report

, and

Procter & Gamble

(PG) - Get Report


Cash is always an option as well, notes Jeffrey Saut, chief investment strategist at Raymond James, who believes now is a good time to rebalance portfolios to ensure one has a cash cushion around for opportunities. "I'm one of those people that think cash is an asset class," he says.

With rates rising, cash is increasingly competing with stocks as well leading to heightened interest in that unofficial asset: cocktails.

In keeping with TSC's editorial policy, Rappaport doesn't own or short individual stocks. She also doesn't invest in hedge funds or other private investment partnerships. She appreciates your feedback. Click


to send her an email.