At the open: Capitulation, here we come
Friday, July 11, 2008
Well, at least there's gold. That's the sort of day Friday is shaping up to be, as financial stocks were whacked in the United States in the morning and dragged down just about everything in their wake.
At the start of trading, the Dow Jones industrial average fell 114 points, or 1 per cent, 11,115 – with all 30 stocks in the index down, including the big energy producers. The broader S[amp]amp;P 500 fell[amp]nbsp;18 points, or 1.4 per cent, to 1236.
Financials were particularly hard-hit, following concerns that Fannie Mae and Freddie Mac are in mortal danger, with the U.S. government considering stepping in to take over one or both of the mortgage finance companies and wiping out the equity. Bank of America and JPMorgan Chase [amp]amp; Co. each fell 3.5 per cent. Meanwhile Fannie Mae tumbled 48 per cent, to $6.92, and Freddie Mac fell 50 per cent, to $4.02.
Even General Electric Co., which had been looking like a bright spot in the market after it met earnings expectations with its second-quarter results, fell 0.7 per cent.
In Canada, the S[amp]amp;P/TSX composite index rose 9 points, to 13,753 – a small victory given that crude oil prices surged to a record high. Oil traded at $146.36 a barrel, up $4.71, giving a modest boost to most energy stocks. EnCana Corp. rose 1.1 per cent and Suncor Energy Inc. rose 1.2 per cent.
The Big Banks were weak, following the lead in the United States. Royal Bank of Canada fell 2.5 per cent and Bank of Montreal fell 1.2 per cent.
However, gold was one of the few bright spots, as investors turned to a reliable safe haven amid the volatility. Gold surged $20 an ounce, to $967.66, lifting the stocks of gold producers. Barrick Gold Corp. rose 5.8 per cent and Goldcorp Inc. surged 6.8 per cent.
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