Blue chips in Toronto sank Tuesday -- led by a drop in financial stocks -- after the Bank of Canada cut interest rates by 75 basis points and declared the Canadian economy to be in a recession.
The S&P/TSX composite index was off 169.56 points to 8,397.56
The Bank of Canada unexpectedly cut its key interest rate on Tuesday by three-quarters of a percentage point to a 50-year low of 1.50 percent and declared the Canadian economy to be in a recession.
On the corporate front -- Canada's largest bank Royal Bank of Canada says it plans to issue up to $2.3 billion in common shares to beef up its regulatory capital ratio.
Davie Yards Inc. has announced an agreement to get a US$10-million financial injection from shipbuilder Bergen Group of Norway and Davie client Cecon ASA, a Norwegian subsea installation contractor.
Major Drilling Group International Inc. fell 97 cents to $9.99 after an August-October profit of $29.3 million, up from $22.6 million a year ago, as revenue rose 22 percent. However, the global provider of mine-drilling services warned of a slowdown next year, especially in base metals.
In the U.S -- the International Council of Shopping Centers and Goldman Sachs reported chain-store sales declined 0.8 percent last week from the prior week, and gained only 0.4 percent from the year-ago period.
In a sign that further weakening may be in store for the U.S. housing market, an index of sales contracts on previously owned U.S. homes fell 0.7 percent in October from the prior month, the National Association of Realtors reported Tuesday.
The Canadian dollar, meanwhile, was trading 0.70 cents lower at 79.08 cents US.
BAYSTREET
Four of the TSX sub-groups traded higher today -- health-care stocks were up 2.87 percent followed by a 1.22 percent gain in gold issues and 0.39 percent rise in mining stocks.
COMEX gold for February delivery jumped $4.90 to settle at $774.20 US an ounce.
On the downside -- financial stocks fell 5.34 percent; consumer discretionary issues shed 2.44 percent and telecom stocks dipped 2.29 percent.
Meanwhile, the TSX Venture Exchange slipped 12.01 points to 686.17 and the NASDAQ Canada was off 12.15 points at 399.28.
ON WALLSTREET
Stocks on Wall Street ended a choppy trading day Tuesday with losses, halting a two-day winning streak as investors were dealt more corporate earnings warnings and as the US awaits word on an expected bailout of its auto industry.
The Dow Jones Industrial Average lost 242.85 points, or 2.7 percent, to 8691.33, and the S&P 500 gave back 21.03 points, or 2.3 percent, to 888.67. The Nasdaq, up some 34 points earlier in the session, ended down 24.4 points, or 1.6 percent, at 1547.34.
Lawmakers continue to debate a $15 billion loan package for GM and Chrysler that would keep the automakers from declaring bankruptcy. The plan would be something of a stopgap measure that would tide the automakers over in order for the new Congress and incoming Obama administration to come up with a longer-term plan for the industry.
Wall Street economists and other market pros are worried that the failure of any one of the Big Three could trigger massive job losses and send the U.S. deeper into recession.
The latest round of profit warnings and job cuts rolled on, with TI and FedEx among the companies cutting their forecasts late Monday.
Package-delivery firm FedEx warned late Monday that fiscal 2009 earnings won't meet earlier forecasts due to the impact of the slowing economy. Shares lost 14 percent.
Sony Corp. said Tuesday it plans to cut 8,000, or 5 percent, of the jobs in its electronics division, as well as close manufacturing sites worldwide in an effort to save around $1.1 billion.
Also Tuesday, AutoZone Inc. reported fiscal first-quarter earnings of $2.23 a share compared to $2.02 a share a year earlier. Analysts had been expecting earnings of $2.20 a share.
Yahoo is closer to naming a new chief executive, but a decision is still weeks away, according to the Wall Street Journal. Former Vodafone CEO Arun Sarin has emerged as a contender, the newspaper said.
Treasury prices gained, lowering the yield on the benchmark 10-year note to 2.67 from 2.74 percent late Monday. The 10-year yield dipped below 3 percent last month for the first time since the note was first issued in 1962. Treasury prices and yields move in opposite directions.
U.S. light crude oil for January delivery fell $1.64 to settle at $42.07 US a barrel, after ending the previous session at a four-year low.
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