Market News: After the Bell
TSX slammed again
RTGAM
The Toronto stock market was slammed with a triple-digit drop for a second session Wednesday as investors sold off energy and mining stocks on worries about the degree that demand for commodities will suffer in an economic downturn.
The S&P/TSX composite index closed off the lows of the day, losing 241.92 points to 13,074.86 after losing more than 300 points at one point during the morning.
"We know the stuff is bad, there is likely more to come and it ain't going to be pretty - it's going to be ugly in fact," said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.
The loss is the latest in a long string of declines this month that have left the TSX just 166 points away from where it started 2007.
The energy sector led the losses, falling 2.88 per cent as oil prices continued to register steep declines.
The February crude contract on the New York mercantile Exchange fell $1.06 (U.S.) to $90.84 a barrel after the U.S. government said crude oil supplies jumped unexpectedly last week.
The gold sector was down 3.55 per cent as the February bullion contract in New York fell $20.60 to $882 on a strengthening U.S. dollar.
The TSX Venture Exchange was down 45.61 points to 2,724.21.
The Canadian dollar was also a casualty of the volatility on equity markets, moving down 0.77 of a cent to 97.6 cents.
New York indexes settled down following steep losses Tuesday even as investors dealt with earnings disappointments from investment bank JPMorgan Chase and chip giant Intel.
They also took in a reading from the Federal Reserve confirming that damage from the contracting housing sector and the credit crisis are making consumers and businesses more cautious.
The Dow Jones industrials slipped 34.95 points to 12,466.16. The Nasdaq composite dropped 23 points to 2,394.59 while the S&P 500 index edged 7.75 points lower to 1,373.2. The Canadian Press
Copyright 2001 The Globe and Mail
Wednesday, January 16, 2008
TSX slammed again a triple-digit drop for a second session
"Keep your emotions out of it. It is going to be a bumpy ride."
Tom Yew
Rita Trichur
Business Reporters
Just hang on.
If yesterday's steep stock market slide wasn't quite steep enough for you, there's likely more where that came from, veteran market watchers say.
The market gyrations are just part of investors coming to grips with the sour notion that growth in the behemoth U.S. economy is tapering off.
The latest bit of bad news came yesterday with figures from the U.S. commerce department showing that retail sales fell 0.4 per cent in December – the biggest decline in six months and far below the 0.1 per cent growth that economists had been crossing their fingers for.
Evidence that U.S. shoppers may finally be running out of steam – consumer spending accounts for two-thirds of the economy – came as Wall Street giant Citigroup Inc. became the latest to announce huge losses for the quarter along with a massive writedown to deal with bad subprime mortgage investments.
Brace yourself for more today: Adrian Mastracci, a portfolio manager at KCM Wealth Management Inc. in Vancouver, said he expects more market turbulence because of Intel's earnings announcement, which came after markets closed yesterday.
The semiconductor company's latest quarterly profit rose 51 per cent to $2.3 billion (U.S.) but the results missed Wall Street's expectations.
Following the announcement, Intel shares fell more than 14 per cent during after-hours trading.
"The economics in the U.S. are obviously changing for the worst. The earnings expectations are being reduced as we see the economy stumble here," said Aron Gampel, deputy chief economist at Scotiabank.
In Toronto yesterday, the S&P/TSX composite index lost 381.50 points to end the day at 13,316.78. That's a decline of 2.79 per cent on the day – one of the worst one-day losses ever for the premier Canadian market.
In New York, the blue-chip Dow Jones industrial average closed at 12,501.11, down 277.04 points, or 2.17 per cent.
The market has digested a lot of bad news in recent days, leaving investors rattled, said Irwin Michael, a portfolio manager at ABC Funds.
"A lot that goes on in the market now has nothing to do with fundamental analysis. It is strictly psychological," he said. "The more the market goes down, the more people think it is going to go down. It is like a dog chasing its tail."
Faced with America's deepening subprime crisis and lingering uncertainties surrounding this country's market for non-bank asset-backed commercial paper, people are finding it hard to resist the compulsion to panic, he said. The current chill is the flip side to the "white heat" that overtook markets during the first half of last year.
"Now you are facing the other side of the coin," Michael said. "They are just selling willy-nilly, just to get out."
In Toronto, big bank stocks – particularly that of the Canadian Imperial Bank of Commerce – pulled the benchmark index lower. CIBC shares were down $2.07 (Canadian) to $70 on the announcement the bank will sell shares to raise $2.75 billion to shore up its balance sheet.
"Investors have really rediscovered flying away from risk," Mastracci said. "But the reality is it's the risk part that ultimately delivers a return." Panicky investors, he said, ought to take a longer-term approach instead of bailing out of the market completely, because key indexes will eventually rebound.
"Keep your emotions out of it. It is going to be a bumpy ride."
