The Toronto stock market dropped to a triple-digit loss Wednesday afternoon after Federal Reserve chairman Ben Bernanke told Congress the U.S. economic outlook remains "unusually uncertain."
The S&P TSX Composite Index tumbled 109.43 points, or 1.1%, to end the day at 11,513.33
TSX financials fell following Bernanke's testimony. Shares in Bank of Nova Scotia lost $1.07 to $50.01.
A disappointing earnings report from major natural gas producer Encana Corp. also pressured the energy sector. Shares in Encana tumbled $1.59 or 4.6% to $32.90 after the company reported a second-quarter loss and a $1-billion drop in revenue.
The recovery south of the border has been losing momentum and fears are growing that it could stall. Spendthrift consumers and businesses, a stagnant housing market, near double-digit unemployment have weighed heavy on an already edgy Wall Street that's been shaken by Europe's debt crisis.
By comparison, the Canadian recovery still appears to be on track, with strong first-quarter GDP growth and a robust employment numbers. The Bank of Canada raised interest rates by a quarter-point on Tuesday, but also downgraded its economic forecast for this year and next.
TSX gold stocks lost ground, as shares in Goldcorp Inc. fell four cents to $42.16.
The base metals sector gained, as the September copper contract on the Nymex jumped 9.15 cents to $3.09 U.S. a pound. Shares in Teck Resources Ltd. climbed 83 cents to $35.14.
Bombardier Inc. has raised its market forecast for commercial aircraft, including the CSeries, over the next two decades. The world's third-largest aircraft manufacturer believes the industry as a whole will deliver 12,800 commercial planes by 2029, including 6,700 jets in the category occupied by Bombardier's new-generation CSeries jet.
The Montreal-based company expects to capture half of the global market. Shares in Bombardier added 13 cents to $4.78.
Shares in Blackberry-maker Research in Motion Ltd. fell $1.79 or 3.1% to $55.94 as its main competitor, Apple reported the highest revenues in its history during the second quarter.
The Canada Pension Plan Investment Board said it will continue to battle against Magna International Inc. in court, if the auto parts giant gets shareholder approval for a deal that would see founder Frank Stronach receive about $1 billion in exchange for giving up his voting control of the company. Shares in Magna lost 88 cents to $75.04.
And shares in Imax Corp. added 21 cents or 1.5% to $14.18 after the company announced a deal to supply its equipment to eight more theatres in China.
In economic news, Statistics Canada said wholesale sales edged down 0.1% to $44.10 billion in May, mainly due to a decline in agricultural supplies industry.
The Canadian dollar was 0.30 cents lower to 95.45 cents U.S.
ON BAYSTREET
All but two of the 14 TSX subgroups were lower on the day. Financials erased 1.9%, while energy stocks surrendered 1.2% and gold stocks fell 1%.
The two gainers were metals and mining issues, ahead 1.5% and consumer staples, ahead 0.3%.
The TSX Venture Exchange picked up 2.36 points to 1,365.56 while the Nasdaq Canada index was down 14.24 points at 631.61.
ON WALLSTREET
In New York, a stock selloff accelerated Wednesday after Federal Reserve Chairman Ben Bernanke told Congress that the outlook for the economy is "unusually uncertain," adding to concerns about the pace of the recovery.
The Dow Jones industrial average ditched 109.43 points, or 1.1%, to finish at 10,120.53.
The S&P 500 index moved 13.89 points lower to 1,069.59. The Nasdaq composite index capsized 35.16 points to 2,187.33.
Stocks were slightly lower through the early afternoon as better-than-expected quarterly profit reports from Apple, Morgan Stanley and Wells Fargo were countered by disappointment about results from Yahoo and others.
But the selling picked up steam in the afternoon following the 2 p.m. ET release of Bernanke's prepared testimony for a Senate committee. The Fed chief told lawmakers that, despite ongoing signs of weakness in the economy, central bankers expect gradual recovery over the next few years, although the labour market healing will be slower than previously thought.
Bernanke also provided more details on how the Fed plans to withdraw the trillions in stimulus it has pumped into the economy since the start of the financial crisis in 2008. But he also said that the Federal Reserve will be ready to provide additional help if the economy deteriorates.
Stocks found a little momentum Tuesday amid speculation that the Federal Reserve may take more steps to encourage bank lending. But that failed to transfer to Wednesday's trading despite a number of improved earnings.
After the close Tuesday, Apple posted its best quarter ever, thanks to sales of its Mac computers, iPads and iPhones. Shares gained 3% Wednesday.
But search engine operator Yahoo reported results that disappointed investors. The Internet company reported higher earnings that beat estimates on revenue that was barely higher from a year ago and was shy of analysts' expectations.
Citigroup downgraded the stock Wednesday, while a variety of other firms downgraded it or cut earnings estimates on the company. Shares fell 8%.
Dow component Coca-Cola reported higher quarterly sales and earnings that topped estimates, helped by increased sales in most of its markets, with particularly strong demand overseas. Shares gained 2%.
Morgan Stanley, Wells Fargo and US Bancorp all reported strong profits, helping to send bank shares higher. The KBW Bank index added 1%.
Morgan Stanley reported a profit of $1.4 billion U.S., better than expected and reversing a loss from the same quarter a year ago. The company also reported higher earnings that topped estimates.
Wells Fargo reported a higher second-quarter profit that topped expectations, thanks to smaller loan losses. Shares gained 4.7%.
US Bancorp reported higher quarterly sales and earnings that topped expectations, thanks partly to lower credit costs.
President Obama signed the Wall Street reform bill into law Wednesday, enacting the most far-reaching financial overhaul since the Great Depression.
Treasury prices gained ground, as yields on the 10-year note eased to 2.89% from Tuesday’s 2.93%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil went south 45 cents to $77.13 U.S.
Gold prices ducked seven dollars to $1,185 U.S. an ounce.
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