Jobs uncertainty and shakeups within the tech and financial world conspired against equity markets throughout North America Thursday, arresting their flight of the day before and dragging them earthward.
New York saw a retraction from Wednesday’s dizzy gains, as a management shakeup at Bank of America and Microsoft's earnings disappointment weighed on investor sentiment.
The S&P/TSX Composite Index ended the day off 271.33 points at 8486.56
On the economic front, investors also took in a dismal Canadian retail sales report for November, higher numbers of Americans filing for jobless benefits last week and an earnings report from Apple Inc. that beat expectations.
The market was under added selling pressure from the energy sector after a report showing much higher than expected crude inventories in the U.S. sent oil prices sharply lower.
The Canadian dollar climbed 0.21 cents from Wednesday’s close to 79.85 cents U.S. as Statistics Canada reported that retail sales in November registered the steepest monthly decline in almost a decade. Sales fell by 2.4% from October to $34.9 billion, with much of the decline attributed to a 7.1% drop in sales in the automotive sector.
There was also a drop of almost 15% at gasoline stations as fuel prices fell considerably from October.
Potash Corp. of Saskatchewan shares were up after it said Thursday that an ongoing demand for fertilizer helped triple its full-year earnings to $3.5 billion while fourth-quarter profits came in at $788 million, more than twice that of year-earlier levels.
However, the global slowdown prompted Potash to cut its 2009 earnings guidance to $10.75 per share, down from an earlier forecast of $12 to $13 per share.
The Toronto-Dominion Bank said Thursday it has arranged a $200-million issue of preferred stock to bolster its capital position, and National Bank of Canada announced a $100-million issue.
On Wednesday, the Royal Bank of Canada and Bank of Nova Scotia both announced $250-million issues of preferred shares.
Shares in Research In Motion Ltd. were off following a report in The Globe and Mail that Ontario's stock watchdog and RIM co-chief executive officers Jim Balsillie and Mike Lazaridis are negotiating a settlement related to their role in a stock option accounting controversy dating back to 1996.
BAYSTREET
All of the 13 TSX sub-groups ended the trading day in the red. Financials took the biggest hit, at 5.1%, followed by energy at 4.3% while the health care sector was 2.8% sicker.
The TSX Venture Exchange slid 1.3 points to 850.21, while the NASDAQ Canada index shed 4.5 points to 519.21
ON WALLSTREET
New York's Dow Jones industrials subsided 153.6 points by the closing bell, to 8,074.54. The S&P 500 gave back 12.7 points to 827.50, while the NASDAQ turned 41.6 softer to 1465.49
Stateside, the Labor Department reported that 589,000 out-of-work employees filed for jobless claims in the week ended Jan. 17. That was worse than the 548,000 claims that were expected, according to a consensus of economists surveyed by Briefing.com.
With the exception of Apple Inc., most of the technology sector was mired losses early Thursday as negative news from Microsoft Corp., Nokia Corp. and Intel Corp. drove the tech stocks into the red.
Microsoft set the tone early when the software giant reported a drop in earnings and plans to lay off as many as 5,000 employees. Microsoft made the announcement before the market opened, ahead of its scheduled after-market earnings call.
Mobile phone giant and networker Nokia fell, after the company reported a 69% drop in its fourth-quarter earnings and said it lost share at the high end of the mobile-phone market.
Intel fell, after the semiconductor giant said it would cut up to 6,000 manufacturing jobs and close facilities in Malaysia and the Philippines, as well as U.S. plants in Hillsboro, Ore. and Santa Clara, Calif. EBay Inc. shares plummeted, after the online retailer reported a 30% drop in quarterly income.
However, Apple Inc. bucked the downward trend after reporting quarterly profit that beat Wall Street's expectations. Apple shares rose, following its better-than-expected first-quarter report that included iPod sales of nearly 23 million devices
U.S. analysts now forecast a 28% drop in profits for the fourth quarter after saying in March 2008 that earnings would rise as much as 55%. Nine of 10 industries in the S&P 500 may show lower fourth-quarter profits, the broadest slump since Bloomberg began compiling the data in 1998. The biggest losses may come from metal processors, financial institutions and companies reliant on consumer spending.
Ex Merrill Lynch CEO John Thain's departure from Bank of America was adding to nervousness about the leadership at the big banks. Thain will leave Bank of America amid criticism of his management of Merrill - purchased by BofA a month ago. Bank of America lost 14% in the afternoon.
JPMorgan Chase & Co. rose 1.3%. After the market closed yesterday, Chief Executive Officer Jamie Dimon disclosed that he bought $11.5 million of JPMorgan stock last week.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.58% from 2.52% Wednesday. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
U.S. light crude oil for March delivery rose 12 cents to settle at $43.67 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery rose $8.80 to settle at $860.50 an ounce.
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