Why Shares in Freeport-McMoRan Fell Sharply Today

Shares in copper miner Freeport-McMoRan (NYSE: FCX) were down nearly 5% as of midday today. There are no prizes for guessing the main reason why. The price of copper, alongside a host of other industrially used commodities, declined again today. With the price of copper now trading at around $3.20 per pound, compared with $4.50 per pound at the start of June and $4.90 per pound in early March, it's clear that the market is selling off economy-sensitive commodities in fear of an upcoming recession.

Another question is whether the 29% fall in the price of copper since early June is reflective of a change in underlying conditions or if it's really due to the flow of speculative money out of the "buy copper to profit from inflation" trade.

Still, Freeport-McMoRan's management believes that, all things being equal, a $0.10 change in the price of copper impacts its earnings before interest, taxes, depreciation, and amortization (EBITDA) by $425 million. So it's understandable if the market reacts negatively.

Source Fool.com