Commodity prices plummeted Thursday after disappointing economic news raised concerns about whether demand will ease as businesses and consumers continue to pay more for food, energy and raw materials.
Oil fell 8.6 percent and silver dropped 8 percent, creating a snowball effect of falling prices across the board for a second straight day.
Fresh economic reports indicated that businesses could be hiring at a slower pace and consumers may be cutting back on some spending because of higher costs for food, energy and raw materials.
The Labor Department said applications for unemployment benefits last week hit the highest level in eight months. That followed a report from the Institute of Supply Management that its service sector index for April rose at the slowest pace in eight months.
The Labor Department is expected to release its closely watched April jobs report on Friday.
The dollar rose sharply against the euro after the European Central Bank's president declined to signal that interest rates would rise again next month. Commodities are traded in dollars and prices tend to fall as the dollar rises and makes commodities more expensive for investors with foreign money.
Investors also are monitoring Europe's efforts to resolve sovereign debt problems and China's measures to curb inflation and slow its economy. China is a huge importer of commodities, from copper to oil.
"We're no longer focused as much on supply problems and shortfalls as we are concerns that the high food and high energy prices are now going to hit us in terms of demand looking forward," said Mike Zuzolo, president of Global Commodity Analytics & Consulting LLC.
Many analysts believe the commodities market will remain volatile over the next couple of weeks but could stabilize by the end of May. That's when investors typically shift their focus more to concerns about weather affecting agricultural products, said Sterling Smith, a commodity analyst at Country Hedging Inc.
If the market continues to post declines over the next couple of weeks, consumers may see a break in gas pump prices that are approaching $4 a gallon on the national level, Zuzolo said. However, it could take more time for companies to adjust food-related price hikes.
Silver led all metals prices lower. Silver for June delivery fell $3.148 to settle at $36.24 an ounce. The price has fallen 25 percent since April 28.
In other metals settlement prices, June gold fell $33.90 to settle at $1,481.40 an ounce; July copper fell 13.6 cents to settle at $3.998 a pound, July platinum fell $48.10 to settle at $1,778.20 an ounce and June palladium fell $35.90 to settle at $710.80 an ounce.
In energy trading, benchmark oil for June delivery fell $9.44 to settle at $99.80 per barrel on the New York Mercantile Exchange.
In other Nymex trading for June contracts, heating oil fell 25.61 cents, or 8.2 percent, to settle at $2.8869 per gallon, gasoline futures fell 22.71 cents, or 6.8 percent, to settle at $3.0954 per gallon and natural gas fell 31.3 cents, or 6.7 percent, to settle at $4.331 per 1,000 cubic feet.
In July agriculture contracts, wheat fell 18 cents to settle at $7.54 per bushel, corn fell 20.75 cents to settle at $7.0875 a bushel and soybeans fell 30.25 cents to $13.2175 per bushel.
AP Economics Writer Christopher S. Rugaber contributed to this report.