Financials roil markets

Financials roil markets

RTGAM



Financial stocks sent North American markets on a volatile ride Wednesday as a warning from Canadian Imperial Bank of Commerce kept Toronto investors reeling while Wall Street faced mixed news from Morgan Stanley.
Toronto's S&P/TSX composite index ended up 31.75 points at 13,389.82 as the financial sector dropped by 0.2 per cent.

Overall, the sector had been up 1 per cent before CIBC announced a "reasonably high probability" that it will incur a "large charge" related to troubles at ACA Financial Guaranty Corp., a hedge counterparty to $3.5-billion (U.S.) in U.S. subprime real estate.
CIBC's stock fell precipitously after the announcement and closed down $1.15 (Canadian) or 1.6 per cent to $71.14 on the TSX.

Morgan Stanley, meanwhile, was forced to take a much larger than expected writedown of $9.4-billion (U.S.) related to the credit crisis, but coupled that with the positive news that it got a $5-billion investment from China's government-controlled investment vehicle, China Investment Corp.

On Wall Street, the Dow Jones industrial average couldn't overcome an afternoon struggle for gains, closing down 25.2 points to 13,207.3. The Nasdaq composite index also backed out of the valley with a five-point gain to 2,601.01 while the S&P 500 index moved down two points to 1,453.

On the TSX, energy stocks gained 0.7 per cent on a report that U.S. crude oil inventories fell by 7.59 million barrels last week.

The light sweet crude oil contract for February closed up $1.16 cents to $91.24 a barrel on the New York Mercantile Exchange. Canadian Press

Copyright 2001 The Globe and Mail