Serenity now!
RTGAM
Stocks took a beating on Monday, and while there were few clear reasons why investors scrambled for an exit - beside the usual assortment of dismal economic news, government bailouts and fears of shareholder dilution - the damage was clear: Major indexes plunged to new lows in an all-out rout that hit just about everything.
The Dow Jones industrial average closed at 6763.29, down 299.64 points, or 4.2 per cent, carving out a new 12-year low. All 30 stocks fell. The broader S&P 500 closed at 700.82, down 34.27 points, or 4.7 per cent, to its lowest level since 1996. In both cases, the one-day declines were the worst since Feb. 10.
Defensive stocks were a mixed blessing: Yes, they outperformed the broader index, but they, too, suffered. McDonald's Corp. fell 0.8 per cent, Wal-Mart Stores Inc. fell 2.4 per cent and Procter & Gamble fell 2.7 per cent. Remember, those were the best performers on the Dow.
Meanwhile, some of the more economically sensitive stocks were hammered out of impatience that the U.S. economy - and the global economy, for that matter - was showing no signs of recovering from deep gloom. Citigroup Inc. fell 20 per cent, Alcoa Inc. fell 11.9 per cent, General Electric Co. fell 10.7 per cent and Boeing Co. fell 6.1 per cent.
In Canada, the S&P/TSX composite index suffered even steeper losses than its U.S. counterpart due to its heavier exposure to weak energy stocks. The index closed at 7687.51, down 435.51 points, or 5.4 per cent - blasting through its Nov. 20 low and ending back where it was in late 2003. It was its biggest one-day setback since Dec. 1.
Financials did not fare well, following meltdowns in the sector around the world. Royal Bank of Canada fell 3.1 per cent, Bank of Nova Scotia fell 5.9 per cent and Manulife Financial Corp. fell 10.2 per cent.
However, energy stocks were the biggest drags after the price of crude oil fell to $40.15 (U.S.) a barrel, down $4.61. Suncor Energy Inc. fell 10.2 per cent and EnCana Corp. fell 6.2 per cent.
Even gold producers were unloved, a shift from their usual pattern of moving in the opposite direction to the broader market. Barrick Gold Corp. fell 5.6 per cent and Goldcorp Inc. fell 5.7 per cent even though gold dipped only slightly, to $940 an ounce. In other commodity moves, Potash Corp. of Saskatchewan Inc. fell 9.4 per cent.
Copyright 2001 The Globe and Mail