Stocks tumbled today after a report saying the global economy will contract more than previously thought persuaded investors that the spring rally has run its course for the time being.
The S&P/TSX Composite Index plunged 433.38 points - or 4.4% - to end the day at 9,834.18.
The losses added to a 3.35% drop on the TSX last week as traders wondered if the rally, which had boosted the TSX by as much as 41% since March 9 on hopes for an economic recovery by year's end, was running out of momentum.
Then today, the World Bank said that the world economy will shrink 2.9% in 2009. That estimate is worse than its previous forecast for a 1.7% decline.
Falling commodity prices in particular punished the TSX, with the energy sector substantially lower as a strong American dollar helped push the July crude contract on the New York Mercantile Exchange down.
Energy sector heavyweight EnCana Corp. fell $3.39 to $54.62.
The Toronto base metals sector plummeted as the price of copper in New York fell 12 cents to $2.13 U.S. a pound.
Teck Resources Limited shares were down $2.00 to $16.83 after it said Friday that it expects its 2009 coal sales to be at the upper end of its guidance for 18 million to 20 million tonnes and cancelled planned temporary production shutdowns at several mines.
Anglo-Swiss mining giant Xstrata PLC has made a preliminary approach seeking a merger with American rival Anglo American.
Anglo American added "situation is at a very preliminary stage and there is no certainty that a transaction will be forthcoming."
The gold sector also got bruised, in particular, Barrick Gold Corp., which lost $1.78 to $36.86.
The financial sector fell with Royal Bank down 87 cents to $45.13.
But the real weight on the sector came from Manulife Financial Corp. Its shares tumbled $2.92 or 12.5% to $20.33 after The Ontario Securities Commission said it was investigating the insurer over what it told investors about the risks of its guaranteed fund business.
Manulife says it received an enforcement notice from staff of the provincial regulator this week in connection with its disclosure before March of the risks in its variable annuity guarantee and segregated funds business.
In other corporate news, shares in Verenex Energy Inc. fell $1.98 or 23.1% to $6.60 as the Calgary-based company faces allegations of improper bidding from Libya's National Oil Company.
The North African firm is trying to thwart the sale of the Calgary-based company to China National Petroleum Corp.
Air Canada shares were down three cents at $1.50 after the carrier announced it has reached a tentative deal with its flight attendants to extend their contract.
Linamar Corp. announced it will get a multi-year contract to supply a European automaker. Production is scheduled to begin in 2011. Linamar expects annualized sales to be above $200 million when the program reaches full production in 2014. Its shares were unchanged at $10.50.
It was also the end of an era for one of Canada's oldest companies as Nortel Networks Corp. shares were suspended by the TSX. The company has asked for the shares to be delisted, a process that usually takes a few days.
The word came after the former Canadian tech heavyweight signed a deal to sell its most of wireless business to Nokia Siemens Networks B.V. for $650 million U.S. and said it's in advanced talks to sell the rest of its operations, winding down a company with a 127-year-old history in Canada. Nortel has been restructuring under court protection from creditors.
Nortel shares closed Friday at 18.5 cents - a far cry from the high of $124.50 from July 2000 when the company accounted for more than one-third of the value of all the companies listed.
The Canadian dollar plummeted 1.27 cents to 86.80 cents U.S.
ON BAYSTREET
All 13 TSX subgroups were in negative territory, weighed down by metals and mining stocks, hurtling earthward 9.3%, energy stocks, down 6.4% and materials, losing 5.8% of their strength.
The TSX Venture Exchange was down 39.84 points to 1,078.96 while the Nasdaq Canada Index slid 37.23 points to 670.55
ON WALLSTREET
In New York, stocks sank Monday afternoon, as the World Bank's weak outlook on global growth and a selloff in commodity prices sent investors heading for the exits.
The Dow Jones Industrials average collapsed 200.72 points, or 2.4%, to end Monday at 8,339.01. The S&P 500 index fell 28.19 points to 893.04. The Nasdaq gave back 61.28 points to 1,766.19
Oil and gold prices slumped and the dollar was mixed. Treasury prices rallied as investors sought safety, sending the corresponding yields lower.
Stock declines were broad-based, with 26 out of 30 Dow issues falling, led by Chevron and Exxon Mobil which fell in tune with the price of oil.
Other big Dow losers included Boeing, IBM, Hewlett-Packard, 3M and United Technologies.
Apple said it sold more than one million copies of its new iPhone 3GS in the first three days it was on sale, in what was being described as the most successful launch of a smartphone ever.
Apple shares fell modestly.
A variety of financial stocks plunged, including American Express, Bank of America and JPMorgan Chase
No economic reports were due Monday, with readings on housing, consumer spending and the labour market due later in the week.
The Federal Reserve Board meets Tuesday and Wednesday to discuss interest-rate policy with an announcement expected Wednesday afternoon. The central bank is expected to hold interest rates steady at historic lows near zero. But as usual, what the bankers say in the statement about the economy will be key.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.69% from 3.83% Friday. Treasury prices and yields move in opposite directions.
Oil prices sank $2.62 a barrel to $66.85 U.S.
Gold prices retreated $15 to $921.00 U.S.
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