Concerns over the U.S. economy and Europe’s debt problems sent the Toronto stock market tumbling Thursday.
The S&P/TSX Composite Index plunged 435.90 points, or 3.4%, to close at 12,380.13, led by steep declines in resource stocks.
The Canadian dollar fell back 1.93 cents to 102.01 cents U.S.
Just a couple of weeks ago, investors were concerned the U.S. economy had hit a soft patch.
Since then a raft of economic data have raised worries about the economy slipping back into recession.
Manufacturing, consumer spending and hiring by private companies are below levels that are consistent with a healthy economy.
Expectations are modest for tomorrow’s U.S. non-farm payrolls report for July, with economists expecting something in the neighbourhood of 75,000 jobs. Pessimism deepened after jobless insurance claims last week were down by only 1,000.
Canadian jobless figures for July will also be released on Friday and economists expect about 20,000 jobs were created.
Oil prices were lower for a fifth day, pushing the energy sector down. Suncor Energy fell $1.53 to $33.38 while Canadian Natural Resources was down 64 cents to $36.19.
The mining sector fell sharply as metal prices also continued to edge lower with the September copper contract down eight cents to $4.25 U.S. a pound. Teck Resources dropped $3.07 to $42.90 while First Quantum declined $9.23 to $116.19.
The financials sector was down amid solid earnings reports from two big insurance companies.
After the markets closed Wednesday, Sun Life Financial reported a five-fold increase in its second quarter profits to $408 million and its shares got caught up in the market selloff and lost 41 cents to $25.55.
Great-West Lifeco Inc. shares dropped 38 cents to $23.00 as it reported its net earnings jumped to $526 million, up from $455 million a year ago.
Elsewhere in the sector, Royal Bank fell 57 cents to $50.73.
The gold sector gave up early gains even as investors looking for a safe haven while fleeing risky assets such as shaky European government bonds continued to send gold further into record territory. Goldcorp Inc. lost $2.04 to $44.88 while Barrick Gold Corp. faded $1.93 to $45.38.
There was plenty of other earnings news for investors digest.
On Thursday, telecom giant BCE Inc. said its profits declined 2.5% in the second quarter to $590 million or 76 cents a share. The slippage was largely due to costs associated with its purchase of the rest of the assets of CTV that it didn’t already own. Operating revenues increased 11.6% to $4.96 billion. Its shares dropped 58 cents to $36.13.
Air Canada shares were off a dime to $2.01 as it narrowed its losses to $46 million in the second quarter.
WestJet shares shed 38 cents to $13.85 even as the carrier reported that it saw its second-quarter profits soar almost 275% to $25.6 million as higher fares and cost controls helped offset increased fuel prices.
Elsewhere, Yellow Media Inc., a publisher of telecom directories and other businesses, slashed its dividend to common shareholders to 15 cents from 65 cents annually in a move to cut debt and improve its balance sheet. Its shares plunged 84 cents or 43.3% to $1.10.
ON BAYSTREET
The TSX Venture Exchange declined 112.33 points to 1,853.34 while the Nasdaq Canada index slumped 38.62 points to 484.84
In Toronto, all 14 subgroups tumbled, weighed most heavily by health-care, off 8.2%, the metals and mining, declining 8.1%, and global base metals, sliding 7.7%.
ON WALLSTREET
In New York, equities plunged Thursday, with the Dow tumbling 500 points just before the close, as fear about the global economy spooked investors.
The Dow Jones Industrials dumped 512.36 points, or 4.3%, to 11,383.70, with Alcoa, Caterpillar and Bank of America among the biggest drags on the blue chip index.
The S&P 500 gave back 60.27 points to 1,200.07. The Nasdaq Composite Index regressed 136.68 points to 2,556.39.
Some of the better performing tech stocks, Apple, Google and Netflix were all down between 2% and 3%.
Fears about a global slowdown are at the forefront of investors' minds amid recent weak economic data. Early Thursday, the latest reading on jobless claims showed a large number of Americans remain unemployed.
U.S. markets were already sharply lower on widespread worries, including the weak job market.
But the selling gained momentum as Japanese and European policymakers stepped in with dramatic measures to shore up their financial markets.
There's "total fear" in the market, according to one expert.
All three major indexes tumbled more than 4% Thursday and erased all their gains for the year. The indexes have also pushed into 'correction' territory - defined as a 10% drop from their highs earlier this year. Over the past 10 days alone, the Dow, S&P 500 and Nasdaq have dropped about 8%.
Auto giant General Motors' second-quarter earnings nearly doubled to $2.5 billion U.S., as revenue rose 19% and topped expectations. Shares of GM slid 2.1%.
Insurance company AIG and newly public LinkedIn are scheduled to report financial results after the closing bell Thursday.
In addition to quarterly financial reports, retailers were also announcing July sales results.
Costco Wholesale Corp. said its same-store sales climbed 10% last month, while Limited said sales rose 6%
Economically speaking, on Thursday morning, the U.S. Labor Department's weekly initial jobless claims report showed that first-time unemployment claims totaled 400,000 last week. Economists had expected weekly unemployment claims to rise to 405,000 from last week's revised 398,000 claims.
While the number was mildly better than expected, it still indicated weakness in the labour market.
Investors are on edge ahead of Friday's closely watched monthly jobs report, which is expected to show that the U.S. economy created 75,000 jobs in July, according to a consensus of 19 economists surveyed by CNNMoney.
In June, the economy added a paltry 18,000 jobs. The unemployment rate is expected to hold steady at 9.2%.
Prices on the 10-year Treasury note moved higher, thus lowering yields to 2.46% from Wednesday’s 2.60%. Prices and yields move in opposite directions.
Oil for September delivery dropped $5.22 to $86.71 U.S. a barrel
Gold futures for December delivery fell $7.30 to $1,659 U.S. an ounce. Earlier in the session, gold hit a record high of $1,684.70 U.S. an ounce.
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