The close: Oil to the rescue Wednesday, June 18, 2008
Canada's benchmark index eked out a gain on Wednesday afternoon after the price of crude oil lifted energy stocks toward the end of the day, but financials remained weak.
The S[amp]amp;P/TSX composite index closed at 15,073.13, up 4.3 points but flat in percentage terms. The energy sub-index, down with the price of oil throughout most of the day, bounced to a 0.9 per cent gain in the afternoon after oil prices rebounded to $136.33 (U.S.) a barrel, up $2.32. EnCana Corp. rose 2 per cent and Canadian Natural Resources Ltd. rose 2.6 per cent.
Financials, meanwhile, looked ugly from the get-go, when Morgan Stanley reported a steep drop in its second-quarter earnings, Fifth Third Bancorp sliced its dividend and a hedge fund manager warned of enormous losses and writedowns still to come. In Canada, Manulife Financial Corp. fell 1.5 per cent, making it the biggest single drag on the index, Royal Bank of Canada fell 1.3 per cent and Toronto-Dominion Bank fell 1.7 per cent.
In the United States, the rebound in oil prices did not help matters, of course. Plus, investors were gloomy after FedEx Corp. shocked the market with a fiscal fourth-quarter loss and lower guidance for the first quarter – a sign that high energy costs (surprise!) and lower economic activity (surprise!) are biting the bellwethers. FedEx shares fell 2.1 per cent.
The Dow Jones industrial average closed at 12,029.06, down 131.24 points, or 1 per cent - its second triple-digit loss in two days. The index dipped below the 12,000-mark – a psychological hurdle for investors and observers who like round numbers – for the first time since March, falling as low as 11,994 in afternoon trading.
The broader S[amp]amp;P 500 closed at 1337.81, down 13.12 points, or 1 per cent. Fifth Third Bancorp plunged 27.3 per cent and dragged down other regional banks. Regions Financial Corp., for example, fell 10.5 per cent.
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