Bay Street stocks dropped to a 12-day low on Tuesday, following the pace set by European and U.S. stocks. Weakness in the financial sector has weighed on the Canadian market.
Shortly before the bell, he S&P/TSX Composite Index had fallen 153.68 points, or 1.4%, to 10,639.99, its second straight downward session.
Financials tailed off, as Bank of Montreal skirted south 3.6% at $50.74, Scotiabank dropped 3.2% at $44.00 and National Bank was down 2.9% to $56.41.
In corporate news, Agnico-Eagle Mines was off 0.2% to $61.62, Goldcorp slipped 1.1% to $38.85 and Barrick Gold declined 0.8% to $36.97. All three were initiated at Hold by Dahlman Rose.
However, Yamana Gold gained 0.6% to $9.81 after the stock was initiated at Buy at Dahlman Rose.
Wesdome Gold Mines also hiked, 1.2% to $1.71, after the company reported second-quarter net income of $7.82 million, compared to $763 thousand in the same quarter of last year.
Iamgold Corp. reached a deal with Avnel Gold Mining Limited and has the option to acquire up to an initial 51% interest in Avnel's 80% interest in Societe d'Exploitation de Mines d'Or de Kalana in Mali, West Africa.
Avnel soared 46.7% to 22 cents while Iamgold was up 2.3% to $13.18 on the news.
Crew Energy was up 2.5% to $5.83 after the company said its second-quarter funds from operations or FFO declined to $20.03 million or $0.27 per share from $34.10 million or $0.58 per share in the year-ago period.
Cardiome Pharma dropped 7.5% to $4.57 after the company reported second-quarter net loss of $1.4 million or $0.02 per share, compared to a net loss of $18.1 million or $0.28 per share last year.
Paladin Labs dropped 6.8% to $17.95, after it reported that its second-quarter net income was $27.73 million or $1.71 per share, compared to $2.60 million or $0.17 per share in the year-ago quarter.
Cascades surged 9.4% to $5.80 after the company reported second quarter net earnings of $30 million or $0.30 per share, compared to net loss of $25 million or $0.25 per share last year.
Rona jumped 1.1% to $14.48 after the company reported its second-quarter net earnings and comprehensive income, including unusual items, slid to $60.80 million from $76.62 million last year.
Economically speaking, the seasonally-adjusted annual rate of Canadian housing starts decreased to 132,100 units in July from 137,800 units in June, according to Canada Mortgage and Housing Corporation.
The Canadian dollar slid 1.02 cents to 90.81 cents U.S.
ON BAYSTREET
Of the 14 TSX subgroups, 11 were in the red. Financials were poorer by 2.4%, real-estate by 1.9% and energy by 1.5%.
The three gainers were global base metals and health-care stocks, both ahead 0.5%, and telecoms, up just less than 0.1%.
The TSX Venture Exchange folded 8.37 points, to 1,176.84, while the Nasdaq Canada Index subsided 11.54 points to 721.83.
ON WALLSTREET
In New York, stocks slumped Tuesday, with a pummeling in bank shares and jitters ahead of a Federal Reserve announcement giving investors a reason to retreat.
The Dow Jones Industrials declined 96.50 points, or 1%, on the day to 9,241.45. The S&P 500 index lost 12.75 points to 994.35. The tech-rich Nasdaq composite came off its lows of the day, but still gave back 22.51 points to 1,969.73.
Stocks slipped modestly in the first 30 minutes of the session, but lost more steam as new banking sector woes surfaced and after the government said wholesale inventories fell 1.7% in June versus forecasts for a drop of 0.9%.
The banking sector retreated after CIT Group delayed its quarterly filing, reviving bankruptcy fears, and several analysts sounded an alarm on the sector. Influential analyst Richard X. Bove of Rochdale Securities said that bank stocks are trading on "fumes" and that investors should take some short-term profits. JPMorgan Chase downgraded bond insurer MBIA, according to published reports.
Investors reacted mildly to the conclusion of the first of the government's three debt auctions this week. On Tuesday, Treasury sold $37 billion U.S. in three-year notes and saw stronger demand than in other recent auctions. The government is offering $75 billion U.S. this week as part of its ongoing efforts to reduce the deficit and fuel its recovery efforts.
Stocks rallied through the end of last week as part of a broader advance that has lifted the S&P 500 50% off the March lows. But investors have dragged their feet this week as they look for new signs that the economy is stabilizing.
Stock declines were broad based, with 26 of 30 Dow issues falling.
Dow financial components American Express, JPMorgan Chase, Bank of America and Travelers Companies all declined.
Among other financial sector movers, CIT Group slumped after saying it will delay filing its quarterly report as it continues to try to restructure its debt and avoid filing for bankruptcy protection.
IBM, Cisco Systems, Chevron, Caterpillar, Walt Disney and General Electric were the Dow's other big decliners.
Investors were also focusing on the Fed's two-day meeting, Tuesday and Wednesday. One expert said that while stocks are lower so far this week, a rally can probably stretch out through the rest of August, before facing bigger challenges in the fall.
Fiscal stimulus and "less bad" economic news and profit reports fueled the stock market rally so far. But, longer term, "we need to see a shift from stabilization in the economy and cost cutting driving earnings to real growth," he said.
Treasury prices advanced, thus lowering the yield on the benchmark 10-year note to 3.67% from Monday’s 3.76%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil lost $1.15 to $69.39 U.S.
Gold prices were flat at $948 U.S. an ounce.
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