Monday, November 10, 2008
U.S. stocks surrendered all of their gains as trading approached the midway point on Monday, with investors growing more concerned about the impact of a slowing economy.
At noon, the Dow Jones industrial average was down 13 points, to 8931. At the start of trading, the index had been up more than 200 points on an upbeat reaction to China's efforts to stimulate its economy with $586-billion (U.S.) worth of infrastructure spending and tax deductions. The broader S[amp]amp;P 500 fell 3 points, to 928.
Financials fell 3 per cent, utilities fell 2.3 per cent and consumer discretionary stocks fell 1.9 per cent.
Investors looked inward as the morning progressed and didn't like what they saw. Deutsche Bank downgraded General Motors Corp. to a “sell” recommendation along with a $0 price target – suggesting the stock was dead. Plus, analysts at Barclays Capital said that Goldman Sachs Group Inc. would report its first loss as a publicly traded company when it releases its fourth-quarter results next month. Barclays predicted Goldman Sachs would lose $2.50 a share.
Meanwhile, electronics retailer Circuit City Stores Inc. filed for bankruptcy and the U.S. government unveiled a new plan to help American International Group Inc., this one raising the bailout to $150-billion from $123-billion previously.
In Canada, the S[amp]amp;P/TSX composite index fared better – though also down from earlier highs – thanks to rising commodity prices. The index was up 124 points, or 1.3 per cent, to 9720.
Materials stocks were up 3 per cent, energy stocks were up 2.3 per cent, industrials were up 1.3 per cent and financials were up 0.8 per cent.
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© Copyright The Globe and Mail
Monday, November 10, 2008
At noon: Goodbye, gains
Alberta Tax=investment is leaving the province
Globe says analyst agrees with Talisman, others on tax
2008-11-10 07:01 ET - In the News
Also In the News (C-CNQ) Canadian Natural Resources Ltd
The Globe and Mail reports in its Saturday edition that investment dealer FirstEnergy Capital Corp. has added its voice to the growing chorus of industry complaints that Alberta's new oil and gas royalty scheme is driving spending elsewhere. The Globe's Norval Scott quotes FirstEnergy analyst Robert Fitzmartyn in a research note as saying,
"There is strong evidence ... to suggest that investment is leaving the province." Mr. Fitzmartyn cites a drop in Crown land sales and flat drilling rig counts since the new royalty scheme was announced. Last week alone, major producers Talisman Energy and Canadian Natural Resources have indicated they will reallocate capital spending from oil and gas exploration in Alberta to opportunities outside of the province.
Some oil sands projects have also been delayed as producers fret over the economics of proposed multibillion-dollar investments, especially given that the financial crisis has pushed crude oil prices down from $147 (U.S.) a barrel in July to around $60 (U.S.).
The reallocation of capital means Alberta is unlikely to recoup the additional $1.4-billion in revenues it has said the higher royalties will create, according to Mr. Fitzmartyn.
