* Indexes down: Dow 1.2 pct, S&P 1.2 pct, Nasdaq 0.8 pct (Updates prices, adds comment)
By Rodrigo Campos
NEW YORK, Jan 5 (Reuters) - Energy sector stocks led a broad selloff on Wall Street on Monday as crude prices fell to fresh 5-1/2 year lows and a strong dollar also weighed on other commodities.
Crude oil futures prices dropped to their lowest since May 2009 amid a global supply glut and lackluster demand. Russia's oil output hit a post-Soviet high last year, and Iraq's oil exports in December were highest since 1980.
The broad selloff is a result of traders knowing where they don't want to be invested before identifying the next buying opportunity, according to Gordon Charlop, a managing director at Rosenblatt Securities in New York.
"There is a lot to digest right now," he said regarding the side effects of the trampling of oil prices.
Aside from the positive effect it has on consumers, traders are figuring out where the plunge in energy could be negative for other sectors of the market.
The strength in the U.S. currency is putting even more pressure on dollar-denominated commodities. A measure of the greenback against a basket of major currencies hit its highest since December 2005.
"Multinationals will have their earnings decreased if they aren't fully hedged," said Rick Meckler, president of LibertyView Capital Management in Jersey City.
At 10:55 a.m. EST (1555 GMT) the Dow Jones industrial average fell 210.61 points, or 1.18 percent, to 17,622.38, the S&P 500 lost 25.24 points, or 1.23 percent, to 2,032.96 and the Nasdaq Composite dropped 38.95 points, or 0.82 percent, to 4,687.86.
The S&P 500 energy sector was down 3.8 percent. It fell almost 20 percent over the last two quarters of last year.
Declining issues outnumbered advancing ones on the NYSE by 2,212 to 745, for a 2.97-to-1 ratio; on the Nasdaq, 1,538 issues fell and 1,040 advanced, for a 1.48-to-1 ratio favoring decliners.
The S&P 500 was posting 5 new 52-week highs and 6 new lows; the Nasdaq Composite was recording 32 new highs and 15 new lows. (Additional reporting by Chuck Mikolajczak; editing by Bernadette Baum and Nick Zieminski)