RTGAM
For a short time on Tuesday afternoon, major North American stock market indexes poked their heads into positive territory, posting their first gains in a long, long time. Alas, that didn't hold: The S&P 500 registered its 11th loss in 12 trading sessions, falling deeper into multi-year lows on waning hopes for an economic recovery any time soon.
Still, perhaps investors can take consolation from the fact that Tuesday's losses were among the slightest of the lengthy losing streak. The S&P 500 closed at 696.33, down 4.49 points, or 0.6 per cent - closing below the 700-point level for the first time since 1996. The Dow Jones industrial average closed at 6726.02, down 37.27 points, or 0.6 per cent.
General Electric Co. fell 7.8 per cent, closing just a penny above $7 (U.S.). Home Depot Inc. fell 5.2 per cent and Coca-Cola Co. - widely considered a defensive stock for being able to weather economic storms - fell 2.2 per cent and touched a new 52-week low.
General Motors Corp. fell 1 per cent after it reported that U.S. auto sales plunged 53 per cent year-over-year in February - though at this point the share price is really just a bet on whether the auto maker survives. Ford Motor Co. fell 3.7 per cent after its February sales fell 48 per cent.
There was some hope that the U.S. administration's release of more details on its plan to buy up distressed assets would remove some uncertainty lingering over the financial sector. It did, sort of: Citigroup Inc. rose 1.7 per cent.
However, investors put greater emphasis on the latest appearance by Ben Bernanke, the U.S. Federal Reserve Chairman, at the Senate banking committee, where he said that the impact of the U.S. administration's stimulus package is subject to "considerable uncertainty, reflecting both the state of economic knowledge and the unusual economic circumstances that we face."
Ugh. As Bob O'Brien, author of Barron's Stocks To Watch Today, put it, saying that the economy won't recover until the banking system improves is "like two drunks locked at the shoulders trying to hold each other up."
In Canada, the S&P/TSX composite index closed at 7631.62, down 55.89 points, or 0.7 per cent, despite aggressive moves by the Bank of Canada to stimulate the economy by cutting its key interest rate to just 0.5 per cent.
An early rally among financial stocks, following upbeat earnings reports from Bank of Nova Scotia and Bank of Montreal, fizzled later in the day. BMO rose 2.4 per cent but Scotiabank ended the day flat; Canadian Imperial Bank of Commerce fell 4.9 per cent and Manulife Financial Corp. plunged 11 per cent, briefly falling below $10 a share.
Copyright 2001 The Globe and Mail