U.S. markets skid
RTGAM
A weak employment report helped knock Canada's benchmark stock market lower Friday while U.S. stocks plunged after fears that the credit-related trouble in the financial sector is far from over.
A Canadian government report showed that the economy unexpectedly shed 18,700 positions last month after seven straight months of job creation. It was a sharp contrast to November, when the economy added a whopping 42,600 positions, and further evidence the economy is losing steam.
The S&P/TSX composite index fell 10.08 points to 13,632.57. The gold sector climbed 2 per cent as bullion futures rose to a record $900.10 (U.S.) an ounce on speculation that U.S. interest rates are going down.
Research in Motion Ltd. stock was actively traded Friday, dropping 6 per cent in Toronto after the company was both upgraded and a downgraded by separate analysts.
On Wall Street, the Dow industrials plummeted 246.79 points lower to close the week at 12,853.09. In the broader U.S. market, the Nasdaq dropped 48.58 points while the S&P 500 lost 19.31 points.
"Equity markets continued to face the stiff headwinds of a struggling U.S. economy and subprime-related writedowns this week," said Robert Kavcic, an economist with BMO Nesbitt Burns Inc.
"Indeed, equity markets are now screaming recession," he said. "While the S&P 500 is down year-over-year for the first time since 2003, the Dow, S&P 500 and TSX have all experienced the often fatal death cross - the 50-day moving average falling below the 200-day moving average."
U.S. credit-card company American Express Co. set an early negative tone Thursday with a lower-than-expected profit forecast that increased concerns that tighter credit may be reducing consumer spending and crippling economic growth. The stock tumbled 10 per cent on Friday, the biggest decliner among the 30 stocks on the Dow.
A media report that Merrill Lynch might take a $15-billion (U.S.) hit from its exposure to soured subprime mortgage investments added to the general unease among investors. Merrill, Citigroup and JPMorgan Chase & Co. are all slated to release their earnings next week.
Shares of Countrywide Financial fell 18.32 per cent after Bank of America stepped in with a $4-billion rescue bid to buy the largest U.S. mortgage lender. Investors were disappointed that the takeover bid was not higher.
With files from wires.
Copyright 2001 The Globe and Mail