US STOCKS-Commodity losses pressure stocks; Nasdaq down 1 pct

* Energy, other sectors fall with commodity losses

* Alcoa gains on buyout rumor

* Indexes down: Dow 0.3 pct, S&P 0.7 pct, Nasdaq 1.2 pct

* For up-to-the-minute market news see STXNEWS/US (Updates to late afternoon)

By Caroline Valetkevitch

NEW YORK, May 3 (Reuters) - U.S. stocks fell on Tuesday, led by commodity-related shares, and investors saw further losses in these sectors, which have gained the most in the recent rally.

Among Nasdaq decliners, shares of Sears Holdings fell 9.7 percent to $76 after the company said it will post a loss for the first quarter. First Solar also was down 2.6 percent at $134.

The Nasdaq rose above 2,861.5, its 2008 peak, last week, but now its momentum is weakening, said Chris Burba, short-term market technician at Standard & Poor's in New York.

Shares of Alcoa Inc , though, gained 0.9 percent to $17.36 on talk in the market that Rio Tinto was lining up a bid to buy the U.S. aluminum producer. Neither Alcoa nor Rio Tinto would comment. For details, see [ID:nN03301346]

The energy sector, which gained 16 percent in the first quarter and outperformed the broader market, led losses on the S&P 500, followed by materials stocks. The S&P energy index <.GSPE> dropped 2.9 percent Tuesday, while oil futures plunged.

"You've had a tremendous run-up here, so you've got some profit-taking and an underlying rotation" out of commodity shares into more defensive sectors, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"My modeling tells me (commodities) are very, very overextended," which means a pullback in commodity sectors may be due, he said.

Among the market's defensive sectors, the S&P utilities index <.GSPU> was up 0.5 percent.

Mendelsohn and Burba said any pullback would likely be short term, and they see the market on an upward trend.

The S&P is up about 30 percent since the start of September, with shares of commodities companies driving much of the rally.

Another solid earnings period further lifted the market in recent weeks, and estimates for S&P 500 company earnings growth keep rising.

The Dow Jones industrial average <.DJI> was down 40.87 points, or 0.32 percent, at 12,766.49. The Standard & Poor's 500 Index <.SPX> was down 9.84 points, or 0.72 percent, at 1,351.38. The Nasdaq Composite Index <.IXIC> was down 33.34 points, or 1.16 percent, at 2,830.74.

Earnings now are expected to have risen 18 percent in the quarter, compared with an April 1 forecast for 13 percent, according to Thomson Reuters data.

Larger-cap stocks were outperforming small caps, suggesting a "risk-off trade" may be taking place, Mendelsohn said. The Russell 2000 <.TOY> index was down 1.8 percent after hitting lifetime highs last week.

A Reuters poll showed on Tuesday that U.S. fund managers slightly lowered their exposure to equities in April and raised their allocation in bonds. [ID:nLDE7420CH]

Among companies reporting results, MasterCard Inc shares rose 2.8 percent to $282.97 after the world's second-largest credit card processing network posted a 24 percent jump in quarterly profit. [ID:nN02251522]

Oil futures hit session lows in late trading, with New York crude dropping to $110.42, down 2.73 percent, and London Brent falling to $121.75, down 2.69 percent. (Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)