The S&P/TSX composite index suffered a deep loss today -- closing down 840.93 points to 11,285.07 -- with a down day on Bay Street worsening into stunning losses after a surprise vote in the House of Representatives kept a proposed government aid package for the financial sector from moving on to the Senate.
International markets were also in turmoil after three major banking bailouts were announced in Europe.
The Dutch-Belgian bank and insurance giant Fortis failed and was provided with a $16.4 billion lifeline by the governments of Belgium, the Netherlands and Luxembourg. The British government nationalized the battered $91 billion mortgage lender Bradford & Bingley. Germany's regulators and banks bailed out Hypo Real Estate Holding AG, in a deal worth billions of dollars.
Investors in Canada appeared to find no reassurance in a move by the U.S. Federal Reserve, the Bank of Canada and other central banks to pump money into the world's credit markets.
The Bank of Canada said Monday that it and the Federal Reserve have agreed to expand their reciprocal currency arrangement to US$30 billion, up from the US$10 billion announced Sept. 18.
In other news -- Manulife Financial Corp. shares lost $1.55 to $36.25 after the insurance giant told investors it has about $600 million in exposure to Wachovia, the latest American bank to surrender to a quick takeover because of the credit crisis.
As for economic data -- the Department of Commerce said that in August, personal incomes rose 0.3 percent, up from a 0.7 percent decrease in July and above economists' estimates. Personal spending was flat in August, falling short of analyst predictions of 0.2 percent growth.
The Canadian dollar, meanwhile, was down 0.76 cent to 95.80 cents US.
BAYSTREET
All of the TSX sub-groups traded lower today -- mining stocks shed 12.78 percent; energy issues were off 10.60 percent and industrial stocks fell 7.42 percent.
COMEX gold for December delivery rallied $9.50 to $898.00 US an ounce. Like oil, gold prices had also rallied during the biggest periods of unrest over the last few weeks
Meanwhile, the TSX Venture Exchange dipped 133.61 points to 1,482.03 while NASDAQ Canada stocks were down 81.71 points at 755.73.
ON WALLSTREET
U.S. stocks plunged Monday as the global credit crisis spread, with four bailouts in Europe and the takeover of Wachovia Corp. in the U.S. roiling securities, commodities and currencies markets and forcing major central banks to pump hundreds of billions of dollars more into the financial system.
The Dow Jones Industrial Average sank 777.68 points to 10,365.45, and the S&P 500 lost 106.4 points to 1,106.57. The Nasdaq plummeted 199.6 points to 1,983.73. The Dow traded in volatile swings of 100-plus points in the minutes immediately following the vote.
The $700 billion proposal, formally presented last week by Treasury Secretary Henry Paulson, failed to garner sufficient votes to make it through the House of Representatives. The package, which would have set up a facility to use government money to buy troubled assets from financial firms, was voted down with an initial tally of 205 votes for the bill to 228 against. The controversial piece of legislation had earlier been expected to make it through. A total of 218 votes were required to pass the bill.
Meanwhile, Morgan Stanley got a $9 billion investment from Japanese bank Mitsubishi UFJ.
A report in The Wall Street Journal said that private equity companies Bain Capital and Hellman & Friedman were in the hunt to buy the Neuberger Berman arm of bankrupt brokerage Lehman Brothers.
The Financial Times reported that insurance firm AIG was contemplating the sale of 15 of its businesses to repay an $85 billion bridge loan from the Federal Reserve and keep from being taken over by the government.
Shares of National City were dropping precipitously, losing 59 percent of their value to trade near the $2 mark as investors feared it may be the next bank to fall.
Longer-dated U.S. Treasury securities were sharply rising in price as investors sought safety from the credit crisis. The 10-year note was up 1-24/32 to yield 3.64 percent, and the 30-year was gaining 3-12/32, yielding 4.17 percent. The American dollar was rising sharply against the euro and pound but falling vs. the yen.
U.S. light crude oil for November delivery fell $11.10 to $95.79 US as investors bet that a slowing global economy means oil demand will keep dropping.
Oil prices had plummeted over $55 after peaking at $147.27 a barrel on July 11, as investors bet that sluggish global growth will diminish oil demand. But prices have seesawed in the last few weeks as the financial crisis has intensified and investors sought to put their money into hard assets.
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