YAHOO [BRIEFING.COM]: The stock market suffered its worst single-session drop in two months as market participants shrugged off a big batch of better-than-expected earnings and the dollar surged.

Apple (AAPL 309.50, -8.50) reported last evening earnings that exceeded the consensus estimate, but expectations for a robust bottom line had been largely built in already as the stock had climbed in 10 straight sessions for a cumulative gain of about 14% ahead of its announcement. Thinner margins and an all-too-typical tepid outlook only offered fodder for the case to take profits.

Despite its own better-than-expected earnings and increased forecast, Dow component IBM (IBM 138.03, -4.80) dropped more than 3% in its worst single-session slide in five months. The stock had set a fresh 52-week high in the prior session.

Fellow Dow component Coca-Cola (KO 60.34, +0.34) was also out with better-than-expected earnings, as were UnitedHealth (UNH 35.30, -0.95) and Johnson & Johnson (JNJ 63.29, -0.57), both of which complemented their reports with raised earnings guidance.

Goldman Sachs (GS 156.72, +3.02) surpassed the consensus earnings estimate with ease by bringing in $2.98 per share, $0.70 above what Wall Street had expected, even though it saw a decline in trading and principal investment revenue.

Capital One Financial (COF 38.76, +1.53) announced ahead of schedule a big upside earnings surprise of its own. The announcement helped shares of COF rally up from an eight-month low in the face of broader market weakness.

Leadership from GS and COF had helped the financial sector stage a modest gain while the broader market was mired in the red, but the sector reversed to finish with a 1.4% loss, which is close to what the broader market suffered. The downturn came in response to headlines that PIMCO and the New York Fed want Bank of America (BAC 11.80, -0.54) to repurchase mortgages. Traders were not at all interested in the bank's better-than-expected bottom line.

The dollar's 1.7% gain -- its best move in two months -- exacerbated weakness among stocks. Strength in the greenback followed supportive comments from Treasury Secretary Geithner and China's decision to hike its interest rates by 25 basis points.

With the dollar up sharply and the broader market inclined to sell, commodities slumped, such that the CRB Commodity Index tumbled 1.9% for its worst loss since late June.

Oil was one of the worst performing commodities. Its price dropped 4.3% to $79.49 per barrel. February was the last time oil suffered such a steep loss.

Sharply lower oil prices and stiff selling in the broader market made energy stocks the worst performing sector. As a group energy stocks tumbled 2.4%. Not even stronger-than-expected earnings from Occidental Petroleum (OXY 81.20, -4.25) could stem the sector's loss.

Strength in the dollar index, stemming from this morning's announcement that China raised 1-year lending and deposit rates by 25 bps, shook the commodities market today. The precious metals sector dropped 3.1% while energy shed 2.8%. The soft commodities sector was the only advancer today.

Dec gold shed 2.8% to close at $1336.00 per ounce, while Dec silver dropped 3.4% to close at $23.78 per ounce. Both metals extended their respective sell-offs in afterhours trade, as they traded to fresh lows. Today's sell off in gold marks its largest move lower since July.

Nov crude oil shed 4.3% to settle at $79.49 per barrel. Concerns about demand in China as a result of this morning's lending and rate hike helped crude oil its largest one day percentage drop since early Feb. Today's lows in crude also represent its lowest levels since late Sept. Nov natural gas finished higher by 0.7% to $3.52 per MMBtu.

Advancing Sectors: (None)
Declining Sectors: Energy (-2.4%), Materials (-2.3%), Health Care (-1.8%), Tech (-1.7%), Industrials (-1.5%), Consumer Discretionary (-1.5%), Financials (-1.4%), Telecom (-1.3%), Consumer Staples (-1.0%), Utilities (-0.6%)DJ30 -165.07 NASDAQ -43.71 NQ100 -1.6% R2K -2.3% SP400 -1.8% SP500 -18.81 NASDAQ Adv/Vol/Dec 438/2.26 bln/2225 NYSE Adv/Vol/Dec 520/1.27 bln/2484