Stock markets and the Canadian dollar were deep into negative territory Tuesday as investor pessimism about the global economy deepened along with concerns about the survival of General Motors Corp.
The S&P TSX Composite Index fell without a parachute, 317.88 points to close the day’s trading at 8,360.22.
The latest turbulence to hit markets comes after a weekend meeting of G7 finance ministers and central bankers failed to reassure investors, while a report from Moody's Investors Services highlighted risks to the European banking system.
The Toronto financial sector was the major decliner, extending last week's losses on unrelenting concerns about the stability of the financial system. Royal Bank moved down $1.25 to $28.55, while Manulife Financial dropped $1.76 to $15.77. The insurer's stock has plunged $3.59 or 18.5% after the company said Thursday that it lost $1.87 billion in the fourth quarter. That was even worse than the $1.5-billion loss estimated in early December.
The TSX energy sector dropped as EnCana Corp. declined $2.69 to $51.42 U.S. in Toronto and Suncor Inc. gave back $1.50 to $23.03
The base metals sector sagged as Sherritt International stepped back 17 cents to $2.75.
Teck Cominco Ltd. said that one-time charges and a sharp drop in commodity prices dragged the debt-strapped mining giant into a loss of $607 million or $1.28 a share for the fourth quarter. The results reversed year-earlier profits of $280 million or $1.12 a share.
Teck's quarterly revenue rose to $1.7 billion from $1.5 billion and its shares fell 51 cents to $4.41.
Cameco Corp., the world's largest uranium miner, says its well-established customer base and growing demand for nuclear energy will help it weather the economic downturn and ongoing problems at its flooded Cigar Lake mine in Saskatchewan. Its shares were down $1.08 to $18.12.
The gold sector ran up, with Goldcorp Inc. ahead $1.44 to $40.56 and Barrick Gold advanced $1.30 to $48.
Research In Motion Ltd. continued to be a weight on TSX, losing $3.09 to $56.96 after RIM said co-CEO's Bastille and Lizards and two former executives have settled allegations of stock option back dating with the U.S. Securities and Exchange Commission. Total monetary penalties of $1.4 million U.S. are to be paid.
The loss came on top of steep declines last week after it said its fourth-quarter profits will come in at the lower end of the company's previous guidance and a Credit Sussex analyst cut his rating on the Blackberry maker to under perform from neutral and slashed his earnings expectations for the February 2010 fiscal year.
A key lender is demanding Canadian Superior Energy Inc. completely repay a $45-million credit line by next Monday – the latest challenge to hit the troubled oil and gas company. Canadian Superior is in talks with the Canadian Western Bank in hopes of extending the repayment deadline past Feb. 23.
Canadian Superior shares plunged 19 cents or 28.3% to 48 cents while Canadian Western Bank shares fell 38 cents to $10.85.
The Canadian dollar was pounded alongside other major currencies as investors piled into the American greenback, tumbling 1.22 cents to 79.16 cents U.S.
BAYSTREET
Of the 13 TSX sub-groups, 11 ended the day lower, financials taking the biggest bruises, 6.6%, followed by energy stocks, off 5.2% and real estate, down 5%.
The two groups in the black included gold, surging 4.4%, and materials, ahead only 0.3%.
The TSX Venture Exchange gave back gains accumulated during the day, and subsided 6.48 points to 919.16 while the NASDAQ Canada index lost 31.61 points, to 461.45.
ON WALLSTREET
The Dow Jones industrials index fell just as hard as its Canadian cousin, losing 297.81 points to 7,552.60. The Standard & Poor’s 500 index tailed off 37.67 points to 789.17, while the NASDAQ composite index capsized 63.70 points at 1,470.66.
Tuesday's loss takes the New York market's blue-chip index within breathing distance of its most recent low of 7,552.29 from late November.
In the U.S., the revised economic stimulus plan, which cleared the House of Representatives and Senate last week, was signed into law by President Obama today in Denver, the site of his nomination speech, in which he said fixing the economy was critical to renewing "America's promise."
White House officials turned cautious Sunday about the extent to which the stimulus legislation -- weakened since its inception -- would act as instant pick-me-up to an economy in ruin.
Investors worried that General Motors Corp. and Chrysler LLC might not be able to prove by a 5 p.m. ET deadline today that they could repay billions of dollars in government loans and return to profitability.
GM has already received $9.4 billion U.S. from the government and could get another $4 billion U.S. if the Treasury Department signs off on its viability plan. Chrysler has borrowed $4 billion U.S. and is seeking another $3 billion U.S.
GM shares plunged 30 cents to $2.20 U.S.
Wal-Mart Stores Inc. shares gained $1.49 to $48.02 U.S. The retailer beat analyst estimates even as fourth-quarter profit fell 7% to $3.8 billion U.S.
The company also said today that first-quarter earnings could miss Wall Street expectations.
A slide in oil prices dragged on energy stocks. Dow components Chevron and Exxon Mobil both lost more than 4%.
Trump Entertainment Resorts filed for Chapter 11 bankruptcy protection Tuesday, as the recession and weaker gambling revenue took a toll.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.67% from 2.89% Friday. Bond markets were closed Monday for the Presidents Day holiday.
The March crude contract in New York moved $2.76 lower to $34.75 U.S. a barrel.
The latest flight to safety boosted gold prices with the April bullion contract on the Nymex up $27.90 to $970.10 U.S. an ounce.
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