The S&P/TSX composite index plunged deep into negative territory Thursday -- down 456.13 points to 9,600.18 -- led by heavy selling in the financial sector -- as investors brushed aside recent interest rate cuts by Canada and the U.S.
Canadian banks are reducing their prime rate by only a quarter-point, citing ongoing high costs in debt markets as the reason for passing along only some of their savings to customers.
In Canada -- Finance Minister Jim Flaherty, told a morning news conference the credit crunch has gotten worse in the last few days and will have ''real consequences'' for Canadian consumers and companies. The spill-over from the financial crisis that started in the United States could soon make it tougher for Canadians to get mortgages and car loans and corporations to borrow cash.
On the corporate front -- Maple Leaf Foods Inc. disclosed that its Toronto meat-processing plant at the centre of a listeriosis outbreak that killed 20 people has produced more contaminated samples. None of the products produced at the plant since it reopened Sept. 17 have been sold.
Two U.S. private equity firms are standing down in their effort to take over Calgary-based power generator TransAlta Corp. LS Power Equity Partners and Global Infrastructure Partners proposed in July to acquire TransAlta for $39 per share, valuing the company at $7.8 billion.
In other news -- legendary resource investor Seymour Schulich is raising his stake in Birchcliff Energy Ltd. to 19 percent. Schulich bought one million shares on the open market Tuesday to increase his holding to 21 million. Birchcliff shares were down 5 cents to $6.05.
As for economic data -- US initial jobless claims for the week ended Oct. 4 came in at 478,000, down from 498,000 the previous week but slightly above economists' estimates for 475,000 jobs lost.
Also -- US wholesale inventories, a measure of lag in demand relative to expectations, rose 0.8 percent in August, slowing from a revised 1.5 percent increase in July, the Commerce Department said. Economists had expected inventory growth of 0.4 percent.
The Canadian dollar, meanwhile, was trading down 1.63 cents to 87.07 cents US.
BAYSTREET
Only one of the TSX sub-groups traded higher today -- utility stocks rose 0.09 percent.
On the downside -- financial stocks were off 7.62 percent; health-care issues were down 7.39 percent and real-estate stocks fell 6.35 percent.
COMEX gold for December delivery fell $20 to settle at $886.50 US an ounce.
Meanwhile, the TSX Venture Exchange was off 30.97 points to 1,041.67 while NASDAQ Canada stocks were down 3.02 points at 576.23.
ON WALLSTREET
U.S. stocks turned lower Thursday for a seventh consecutive day as financial shares weighed, dimming earlier enthusiasm that came after International Business Machines Corp. topped profit estimates.
The Dow sank 678.91 points, or 7.3 percent, to close around 8,579.19, its first foray below 9000 in more than five years. It was one year ago today that the Dow closed at an all-time record high of 14,164.
The S&P 500 lost 75.02 points, or 7.6 percent, to 909.92, and the Nasdaq lost 95.21 points, or 5.5 percent, to 1645.12.
The New York Times reported that the Treasury may take ownership positions in U.S. banks to improve confidence in the financial system. The U.K. has pursued a similar plan by taking partial national ownership in Royal Bank of Scotland and Barclays.
Bloomberg reported that BlackRock and Pimco, a unit of Allianz, had both proposed to manage mortgage-backed securities to be bought by the Treasury as part of its $700 billion financial-sector rescue plan.
Separately, the Fed said it would grant insurance company AIG up to $37.8 billion in exchange for fixed-income securities. The cash infusion comes on top of the $85 billion already lent out in September to keep the company from going bankrupt.
IBM cheer faded even after the industry bellwether released its third-quarter earnings ahead of schedule, reporting a 20 percent profit rise and reiterating its 2008 outlook.
Longer-dated U.S. Treasury securities were declining in price. The 10-year note was down 1-6/32 to yield 3.78 percent, and the 30-year was down 30/32, yielding 4.1 percent. The American dollar was gaining ground on the yen and pound, but softening and euro.
U.S. light crude oil for November delivery fell $1.05 to $85.54 US a barrel on the New York Mercantile Exchange on continued bets that the slowing global economy will hurt demand.
