Crude oil was hammered on Tuesday after Ben Bernanke

Crude oil was hammered on Tuesday after Ben Bernanke, the Chairman of the U.S. Federal Reserve, said in a speech that inflation and the health of the U.S. dollar were now in his sights."Back in 1978, the Fed also showed concern about the weaker dollar contributing to the inflation problem," Paul-Andre Pinsonnault, senior fixed income strategist at National Bank, said in a note. "At the time, its response was to raise interest rates. Will history repeat itself?"Though Mr. Pinsonnault thinks a rate increase is unlikely in the near term, commodity investors appeared to be ratttled by the prospect. Oil fell to $124.31 (U.S.) a barrel in New York, down $3.45, leading to big losses among energy producers.The commodity-heavy S&P/TSX composite index closed at 14,728.61, down 85.57 points or 0.6 per cent.

Talisman Energy Inc. fell 2.1 per cent and Suncor Energy Inc. fell 3.2 per cent.As well, the price of gold fell to $880.60 an ounce, down about $11. Barrick Gold Corp. fell 0.6 per cent and Goldcorp Inc. fell 2.3 per cent.However, the Canadian benchmark index was saved from more severe losses by a rally among agriculture stocks, which are getting renewed attention with the emergency meeting of the United Nations Food and Agriculture Organization in Rome this week. In particular, Potash Corp. of Saskatchewan Inc. rose 4.9 per cent, contributing nearly 30 points to the index.

The Dow Jones industrial average closed at 12,402.85, down 100.97 points or 0.8 per cent. Boeing Co. fell 3.7 per cent, Alcoa Inc. fell 2.5 per cent and Exxon Mobil Corp. fell 2.4 per cent. As well, Microsoft Corp. extended its losing streak to nine out of the past 12 trading sessions, falling 1.8 per cent.The broader S&P 500 closed at 1377.65, down 8.02 points or 0.6 per cent. Lehman Brothers Holdings Inc. fell 9.5 per cent on concerns about coming losses and speculation the securities firm will have to issue additional common shares.In a curious twist, homebuilder stocks were higher:

KB Home rose 5.6 per cent a day after the company's chief executive said U.S. home prices will likely fall another 10 per cent. Clearly, that's interpreted as good news these days.Copyright 2001 The Globe and Mail