The streak dies
RTGAM
So much for the recent winning streak that had been promising to put a bullish spin on North American stocks. On Thursday, major indexes handed back most of the gains won during Wednesday's upbeat session and put an end to four consecutive days of higher closes.
The setback will also likely make January a writeoff for the stock market, with just one trading day left in the month to erase substantial losses so far this year.
The Dow Jones industrial average closed at 8149.01, down 226.44 points, or 2.7 per cent. The broader S&P 500 closed at 845.14, down 28.95 points, or 3.3 per cent. The index is down 6.4 per cent this year.
Clearly, investors are willing to do 180-degree turns on financials these days. On Wednesday, they entertained hopes that the U.S. government will soon create a so-called bad bank to absorb the toxic assets of struggling financial firms, leaving their balance sheets healthier and making the companies more likely to lend money.
On Thursday, a report showed that new-home sales plunged 14.7 per cent in December, dashing hopes for a recovery in the devastated U.S. housing market - which is key to stability in the financial sector. As well, tumbling durable goods orders suggested that the demand for big-ticket items continues to crumble
Needless to say, financials led the selloff, with Bank of America Corp. down 8.3 per cent and Citigroup Inc. down 7.4 per cent. Wells Fargo & Co., which had surged more than 30 per cent on Wednesday, sank 11.4 per cent on Thursday.
However, the selloff was widespread, with 27 of the 30 names in the Dow falling. General Motors Corp. fell 7 per cent after Ford Motor Co. reported a fourth-quarter loss of $5.9-billion (U.S.)., General Electric Co. fell 5.8 per cent and Pfizer Inc., which recently made moves on Wyeth in a $68-billion deal, fell 2.1 per cent.
In Canada, the S&P/TSX composite index closed at 8762.76, down 143.47 points, or 1.6 per cent. Financials were among the biggest drags on the index, with Manulife Financial Corp. down 6.1 per cent, Toronto-Dominion Bank down 5.7 per cent and Royal Bank of Canada down 4.3 per cent. Energy stock were also generally weak, despite the price of crude falling only slightly, to $41.44 a barrel. Suncor Energy Inc. fell 4.1 per cent and EnCana Corp. fell 3.6 per cent.
Among the winners: Gold producers surged, following a spike in the price of gold to $906.50 an ounce, up $16.50, as investors sought refuge from the rest of the stock market. Barrick Gold Corp. rose 7.2 per cent and Goldcorp Inc. rose 6.9 per cent.
Copyright 2001 The Globe and Mail
Thursday, January 29, 2009
So much for the recent winning streak
Wednesday, January 28, 2009
No bad news here
No bad news here
Investors weren't in any mood Wednesdy to hear about the negative forecasts of the "experts," but were more than happy to buy stocks in anticipation of big stimulus cheques and bailout plans, sending North American indexes sharply higher.
The International Monetary Fund released its latest forecast for global economic growth, shredding earlier projections of a modest downturn and incorporating a new vision of real trouble ahead. The U.S. economy is now projected to contract by 1.6 per cent in 2009, as against an earlier forecast of a decline of 0.7 per cent. For Canada, the new forecast is for a contraction of 1.2 per cent, down from 0.3 per cent growth. The global economy is expected to slip deeper into recession.
Meanwhile, the U.S. Federal Reserve ramped up the grim talk in its latest monetary policy statement, released in the afternoon.
"Information received since the committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending," the Fed said. "Furthermore, global demand appears to be slowing significantly."
You wouldn't know it from stock market moves, though, which instead reflected hopes for a $900-billion (U.S.) stimulus package from the U.S. administration and the creation of a "bad bank" to absorb the toxic assets of struggling U.S. financial firms.
The Dow Jones industrial average closed at 8375.45, up 200.75 points, or 2.5 per cent. The broader S&P 500 index closed at 874.09, up 28.38 points, or 3.4 per cent. It was the index's fourth gain in four trading days.
Financials were the big winners for the day. Wells Fargo & Co., which reported a loss of $2.55-billion in the fourth quarter but said its dividend was safe, surged 30.9 per cent, JPMorgan Chase & Co. rose 10.4 per cent and Bank of America Corp. rose 13.7 per cent.
In Canada, the S&P/TSX composite index closed at 8906.23, up 146.60 points, or 1.7 per cent. There, financials also stormed higher on the premise that some degree of risk surrounding the sector was about to be lifted, thanks to moves in the United States. Toronto-Dominion Bank rose 6.7 per cent and Bank of Nova Scotia 5.3 per cent.
Energy stocks were mixed, after the price of crude oil rose 58 cents, to $42.16 a barrel. EnCana Corp. rose 4.9 per cent and Talisman Energy Inc. rose 1.3 per cent, but Canadian Oil Sands Trust slipped 3.3 per cent.
Gold producers did not fare well, with the price of gold falling to $888.20 an ounce, down $11.30. Barrick Gold Corp. fell 3.5 per cent and Goldcorp Inc. fell 4.6 per cent.
Copyright 2001 The Globe and Mail
Investors weren't in any mood Wednesdy to hear about the negative forecasts of the "experts," but were more than happy to buy stocks in anticipation of big stimulus cheques and bailout plans, sending North American indexes sharply higher.
The International Monetary Fund released its latest forecast for global economic growth, shredding earlier projections of a modest downturn and incorporating a new vision of real trouble ahead. The U.S. economy is now projected to contract by 1.6 per cent in 2009, as against an earlier forecast of a decline of 0.7 per cent. For Canada, the new forecast is for a contraction of 1.2 per cent, down from 0.3 per cent growth. The global economy is expected to slip deeper into recession.
Meanwhile, the U.S. Federal Reserve ramped up the grim talk in its latest monetary policy statement, released in the afternoon.
"Information received since the committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending," the Fed said. "Furthermore, global demand appears to be slowing significantly."
You wouldn't know it from stock market moves, though, which instead reflected hopes for a $900-billion (U.S.) stimulus package from the U.S. administration and the creation of a "bad bank" to absorb the toxic assets of struggling U.S. financial firms.
The Dow Jones industrial average closed at 8375.45, up 200.75 points, or 2.5 per cent. The broader S&P 500 index closed at 874.09, up 28.38 points, or 3.4 per cent. It was the index's fourth gain in four trading days.
Financials were the big winners for the day. Wells Fargo & Co., which reported a loss of $2.55-billion in the fourth quarter but said its dividend was safe, surged 30.9 per cent, JPMorgan Chase & Co. rose 10.4 per cent and Bank of America Corp. rose 13.7 per cent.
In Canada, the S&P/TSX composite index closed at 8906.23, up 146.60 points, or 1.7 per cent. There, financials also stormed higher on the premise that some degree of risk surrounding the sector was about to be lifted, thanks to moves in the United States. Toronto-Dominion Bank rose 6.7 per cent and Bank of Nova Scotia 5.3 per cent.
Energy stocks were mixed, after the price of crude oil rose 58 cents, to $42.16 a barrel. EnCana Corp. rose 4.9 per cent and Talisman Energy Inc. rose 1.3 per cent, but Canadian Oil Sands Trust slipped 3.3 per cent.
Gold producers did not fare well, with the price of gold falling to $888.20 an ounce, down $11.30. Barrick Gold Corp. fell 3.5 per cent and Goldcorp Inc. fell 4.6 per cent.
Copyright 2001 The Globe and Mail
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