Bay Street stocks moved into negative territory on Tuesday afternoon, led by weakness in the mining and energy sectors. After opening notably higher, the index began a sharp downtrend by noon.
The S&P/TSX Composite Index eased back 87.38 points to end the day at 10,307.40, adding to Monday’s 250-point selloff which cooled off an eight-month high for the index last week.
Mining stocks reversed course and were down as the price of copper turned lower on the Comex.
Teck Cominco dropped 5.9% to $18.25, Inmet was down 4.6% to $39.29 and HudBay has declined 2.9% to $7.76.
Equinox Minerals added 4.3% to $2.67 after the shares were upgraded to Sector Perform from Underperform by RBC Capital Markets.
Energy stocks were down as crude oil gave back an early rally. Suncor dropped 3.3% to $36.22, Encana dipped 2.2% to finish at $59.03 and Canadian Natural Resources dropped 1.7% to $61.32
On the upside, gold stocks were up as Goldcorp added 2% to $39.10 after the stock was upgraded to Outperform from Market Perform.
In corporate news, Research in Motion was up 0.3% to $91.21 as several analysts boosted their target price for the Blackberry maker. Thomas Weisel raised its forecast to $92 per share from $85, RBC Capital Markets upped its outlook price to $100 per share from $90 and Credit Suisse bumped up its target price to $76 from $61.
RIM, which will unveil its new BlackBerry Tour later this year, is expected to report quarterly earnings on Thursday.
In other corporate news, Magna International rocketed up 7.3% to $43.92 after the company was upgraded to Overweight from Neutral by JPMorgan Chase.
Air Canada received 8.7% worth of lift to $1.62 as the company reportedly reached tentative deals with its pilots and flight attendants regarding the airliner's pension obligations.
Methanex was down 0.2% to $15.52 after the stock was downgraded to Neutral from Buy at UBS.
Biovail slid 2.3% to $13.47 despite seeing its target price raised to $15 from $13 at Credit Suisse. The stock's rating was reiterated at Neutral.
Economically speaking, Statistics Canada said the labour productivity of Canadian businesses rose 0.3% in the first quarter. The decline in unit labour costs in Canadian businesses in U.S. dollars continued for a third consecutive quarter, as their costs decreased by 1.8% in the first quarter.
The Canadian dollar faded 0.09 cents to 88.23 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, eight were down on the day. Metals and mining stocks lost 2.4%, energy stocks were next, off 2.3%, and health-care stocks were 1.2% to the bad.
Gold led the five gainers, up 2.2%, while consumer discretionaries were ahead 0.6%, consumer staples up only 0.3%.
The TSX Venture Exchange added 6.24 points to 1,139.19 while the Nasdaq Canada Index was off 1.37 points to 767.76.
ON WALLSTREET
In New York, stocks tumbled Tuesday, falling for a second session in a row on continued worries that the pace of the recession is not waning as much as has been hoped.
The Dow Jones Industrials average was down 107.46 points to 8,504.67. The S&P 500 index slid 11.75 points, to 911.97. The Nasdaq composite was down 20.20 points to 1,796.18.
Better-than-expected reports on housing and wholesale inflation gave stocks a boost early in the session. But the advance was tepid and soon lost momentum as concerns about the economy reared up again.
Declines were broad-based, with 28 of 30 Dow stocks falling, led byProcter & Gamble, McDonald's, 3M, Boeing and Caterpillar. Dow oil components Chevron and Exxon Mobil both slipped as well.
The markets have been rallying for three months as investors have bet that the economy is closer to stabilizing. Since bottoming March 9 at a more than 12-year low, the S&P 500 has added 37%, as of Monday's close.
But the advance has lost some steam in the last week as investors have worried that the rally may have gotten ahead of any actual evidence of a recovery.
The European arm of General Motors said it has reached a deal to sell Saab to Sweden's Koenigsegg. The deal had been widely expected.
On the economic front, housing starts jumped 17% to the annual rate of 532,000 in May, from a revised 454,000 the prior month. That's much higher than the 485,000 forecast by a consensus of economists, according to Briefing.com.
Building permits, an important signal for upcoming housing activity, rose 4% to the annual rate of 518,000 in May, from April's rate of 498,000. This was higher than the rate of 508,000 expected by Briefing.com consensus.
The Producer Price Index, a measure of prices at the wholesale level, edged up 0.2% in May, compared to an increase of 0.3% in April. This is the less than the 0.6% that was expected by Briefing.com consensus.
The core PPI, excluding food and energy prices, slipped 0.1% in May, compared to its 0.1% increase the prior month. Briefing.com consensus had expected it to edge up 0.1%.
On the negative side, industrial production decreased a greater-than-expected 1.1% in May, with capacity utilization plunging to 68.3%, the lowest level since record keeping began in 1967.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.68% from 3.72% Monday. Treasury prices and yields move in opposite directions.
U.S. light crude oil for July delivery fell 15 cents to settle at $70.47 U.S. a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose $4.70 to settle at $932.20 U.S. an ounce.
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