The Toronto stock market sustained a sharp, triple-digit plunge for a third straight session Wednesday, as economic worries continued to persuade investors to sell stocks and collect profits from the spring rally.
The S&P TSX Composite Index plunged another 169.15 points, to end the day at 9.675.20.
The rally had sent the TSX up as much as 41% in mid-June from multi-year lows in early March. But the TSX is now in correction territory, down 10% from the rally's high.
Rising commodity prices and stocks have played a big part in the market rally as traders hoped for a quick economic rebound, also pinning hopes on Asia as China stockpiled oil and metals.
But the energy sector was down sharply with oil prices lower for a sixth straight day from a peak of above $73 U.S. last week, evidence investors think demand prospects do not warrant the sharp run-up in prices seen over the past few months.
Also helping depress prices was the Organization of Petroleum Exporting Countries. The cartel predicted that demand for crude has fallen so sharply, it will take another four years to recover to 2008 levels.
Oil prices have fallen about 12% in the past week.
EnCana Corp. fell 80 cents to $52.25.
Financials were a major weight with the sector down, as Bank of Montreal backed off $1.61 to $45.68.
Markets found little solace from a report from the International Monetary Fund, which said it expects the world economy to shrink by 1.4% in 2009, slightly worse than its earlier estimate of a 1.3% contraction.
But the IMF boosted its estimate for global economic growth in 2010 to 2.5%, up from its April projection of 1.9%.
The base metals sector backed off seriously as the September copper contract in New York was down 6.65 cents to $2.159 U.S. a pound, October platinum fell $34 to $1101.80 U.S. an ounce and September palladium dropped $6.40 to $234.10 U.S. an ounce. HudBay Minerals lost 50 cents to $6.34.
Moody's Investors Service has upgraded Teck Resources Ltd.'s rating outlook to positive from negative after the company sold China a 17.2% stake in the company. Teck shares were down 91 cents to $17.93.
The gold sector was down as Barrick Gold Corp. moved $1.33 lower to $36.89.
The consumer staples sector gained, as shares in drugstore chain Jean Coutu Group were sharply higher for a second day following a well-received earnings report, up 49 cents to $9.97.
In corporate news, Chinese automaker Beijing Automotic Industries Corp. has joined the bidding for General Motors' German unit, Adam Opel GmbH. BAIC made its bid while Detroit-based GM considers a proposal to sell Opel to Canadian auto parts manufacturer Magna International said Maggie He, a spokeswoman for GM China. She said GM would not release details of the BAIC bid. Magna shares were off 18 cents to $47.84.
The world's leaders are preparing for a review of the state of the global economy as they gather for a G8 summit in central Italy. The major issues that would be addressed at the three-day summit will include global economic recovery.
There is no major economic news due in Canada today, leaving traders to peek ahead to Thursday's housing starts data. Canadian job data for June is released Friday and economists expect it to show the economy shed about 30,000 jobs during the month.
The Canadian dollar was down 0.16 cents to 85.62 cents U.S.
ON BAYSTREET
All but one of the 14 TSX subgroups ended the day in negative territory. Metals and mining suffered the worst, losing 5.8%, materials were down 3.6% and gold was off 3.4%.
Consumer staples proved the lone winner, gaining 1.2%.
The TSX Venture Exchange slid 37.67 points, to 1,031.89, while the Nasdaq Canada Index faded 8.32 points to 640.26.
ON WALLSTREET
In New York, stocks erased losses Wednesday afternoon, turning higher late in the session as investors geared up for the start of the quarterly reporting period, which was to get underway later on with Alcoa.
The Dow Jones Industrials average gained 14.81 points, to 8,178.41. The S&P 500 index slid 1.47 points to 879.56. The Nasdaq tacked on one point to 1,747.17.
Stocks tumbled Tuesday, with the Dow falling to two-month lows on fears that the economy won't stabilize as quickly as some have hoped. Stocks have drifted lower since mid-June with investors growing jittery after a three-month stock market rally that propelled the S&P 500 off of 12-year lows by about 40%.
The recent selloff has reflected worries about the economy, punctuated by the weaker-than-expected June jobs report, released last week. Now investors will be looking to corporations to provide guidance about their profits and the outlook for the economy.
Tech behemoth Google said late Tuesday that it will challenge Microsoft's dominant Windows by launching a rival operating system called Chrome OS. The system will be available in the second half of 2010.
Google shares gained, but other big techs slipped including chipmakers Intel, Advanced Micro Devices and Applied Materials.
Among other movers, big oil stocks slumped along with the price of the raw commodity. Dow components Chevron and Exxon Mobil both declined. Other big oil company losers included ConocoPhilips, Schlumberger and Transocean.
Wall Street is bracing for the start of the second-quarter reporting period, which unofficially kicks off after the close today with Dow component Alcoa.
The aluminum producer is expected to post a loss of 38 cents U.S. per share, according to Thomson Reuters estimates. In the second quarter last year, Alcoa posted earnings per share of 66 cents U.S.
May consumer credit fell $3.22 billion U.S. versus a revised decline of $16.7 billion U.S. in the previous month. Economists surveyed by Briefing.com thought it would fall by $8.8 billion U.S.
Treasury prices jumped, lowering sharply the yield on the benchmark 10-year note to 3.29%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil collapsed $2.79 to $60.18 U.S.
Gold prices subsided $20 an ounce to $909 U.S.
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