(Alcoa earnings item updated from April 11.)

NEW YORK ( TheStreet) -- Alcoa ( AA) reported first-quarter earnings Monday that squeaked past Wall Street expectations by a penny, but a miss on the company's top line weighed on the company's stock in Tuesday's regular session.

After the bell Monday, Alcoa said its revenue in the first quarter came to $6 billion, up from $4.9 billion a year earlier but lower than the $6.3 billion that Wall Street analysts were targeting.

Investors chose to punish the Pittsburgh aluminum giant, sending its shares down 6.5% in midday trading Tuesday. Volume reached nearly 50 million shares, compared with average daily turnover of about 28 million.
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Alcoa's share-price decline was amplified by macro-economic factors, analysts and traders said, with stocks falling sharply across the metals and mining complex. Renewed fears in Japan after the government raised the radiation-threat ranking to the same level as Chernobyl, weak U.S. import data and a bearish call on commodities (especially oil and copper) from Goldman Sachs ( GS) all served to motivate selling during Tuesday's session, according to market observers.

More pertinently for Alcoa and other commodities-linked stocks: With the Federal Reserves's quantitative easing program coming to an end in June, investors fear a rise in interest rates. If that happens, "the commodity trade gets whacked," said Lee Munson, chief investment officer at Portfolio LLC, a hedge fund. Miners such as Cliffs Natural Resources ( CLF) and Freeport McMoRan ( FCX), for instance, saw their shares fall more than 4% apiece intraday Tuesday.

Still, Wall Street analysts were bullish on Alcoa's fundamentals, and not nearly as nonplussed with the revenue shortfall, by and large, as investors appeared to be.

"My sense is that only about half of Alcoa's selloff is actually due to the market's reaction to its earnings," said Bridget Freas, metals equities analyst with Morningstar. "Alcoa has some positive momentum going into the second quarter because aluminum prices have continued to rise."

Lloyd O'Carroll, the metals and mining analyst at Davenport & Co. in Richmond, Va., called the reaction to the revenue miss "overdone."

"There's a lot of good underlying things going on," he said, pointing to the year-over-year rise in tonnage, or the amount of aluminum products sold by the company. In the first quarter, Alcoa said it shipped about 1.2 million metric tons, up from 1.1 million in the same period a year ago.

In a note to clients Tuesday morning, Dahlman Rose analyst Anthony Rizzuto didn't mention the top-line miss. He said that Alcoa will continue to benefit from rising aluminum prices, an ongoing shift to spot-market pricing for its supply contracts with customers (much like the big iron ore miners and their quarterly price settlements with steelmakers), and improving sales in Alcoa's "downstream" segment, which refers to finished aluminum products like beverage cans or sheet metal for aircraft.

After Monday's closing bell, Alcoa reported first-quarter earnings per share of 28 cents, excluding one-time items, topping Wall Street's 27-cent target.

Alcoa said its net income -- $309 million, or 27 cents a share, which includes the one-time items -- was the most it has taken in since the second quarter of 2008, on the cusp of the financial crisis. The results were up 20% from the previous quarter, lifted by rising prices for aluminum.

The company also swung into the black from a loss a year earlier of $201 million, or 20 cents a share.

Still, Alcoa noted several trends that had dragged on its profit during the first quarter, including a weaker U.S. dollar and higher energy and raw materials costs. The biggest cost component in making aluminum is electricity.

On the demand side, Alcoa struck bullish notes in its press release. "Our outlook for the rest of 2011 and beyond remains very positive," said CEO Klaus Kleinfeld in his prepared statement. The company also reaffirmed its forecast for global aluminum demand, which it unveiled when it reported fourth-quarter results in January. The company's economists see aluminum demand growing by 12% worldwide in 2011.

Partly because of strengthening demand, aluminum prices have risen steadily (for the most part) since the middle of last year, recently achieving their highest point -- almost $1.20 per pound on the London Metals Exchange -- since early September 2008. Alcoa's results and its stock price closely track the commodity price of its namesake metal.

The price has also been helped by capacity reductions in China, the world's largest aluminum producer, which has idled less-efficient smelters in an effort to save energy. Alcoa executives signaled Monday that they believe Chinese officials are likely to hold back on increasing the country's aluminum capacity -- a decision that would support prices for the metal.

Davenport's O'Carroll said he just returned from the spring meeting of the Aluminum Association last week. "My big takeaway there was: everyone was talking about volumes. There was strength in every end market except commercial construction, and that's flat. I heard things that were more bullish than I anticipated."

Still, he said, "We're neutral on Alcoa stock at this point because of concerns about the aluminum price. So far we've been wrong, though, and it's kept rising."

-- Written by Scott Eden in New York

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