Even with encouraging economic news from both sides of the border, the bottom fell out on Canadian stocks Friday after treading water for most of the week. Traders shrugged off data showing better-than-expected economic growth.
The S&P/TSX Composite Index took a sharp trip downward Friday afternoon, losing 179.89 points, or 1.6%, to 11,094.31.
Technology sector, already the better performer of the week, got a boost today as U.S. software giant Microsoft reported a 60% surge in its second-quarter earnings. But IT stocks failed to capitalize on it as broad-based selling pressure returned to dominate the market. Research In Motion Ltd. eased 2.4% at $67.19 and CGI Group Inc. lost 3.25% to $14.01.
Among energy stocks, Suncor Energy was down 1.3% at $33.89 and Imperial Oil Ltd. lost 1% to $38.54 while Encana Corp lost 0.76% to $32.85.
Trend in the financial sector was rather mixed, with AGF Management Ltd rising 0.7% at $16.10 and Great-West Lifeco Inc. adding 1% at $25.88, while banking majors Bank of Nova Scotia shed 1.6% at $44.96 and Royal Bank of Canada lost 1.76% to $52.54.
The Gold Index was down, with Barrick Gold Corp off 2.9% at $37.22.
Kinross Gold Corporation lost 3.6% to $17.33, despite reporting a 12% increase in its proven and probable mineral reserves during 2009 to 51.0 million ounces of gold.
The Health-care Index was up, led by Biovail Corp which added 1.6% to $15.52.
DHX Media Ltd soared 15.79% to $1.10, after the company announced completion of a private placement of 1.875 million units with Sprott Asset Management LP for $1.5 million.
Wood panel maker Norbord Inc., which reported a full-year loss of $58 million and fourth-quarter loss of $11 million in 2009, was up 0.8% to $16.68.
In economic news, Statistics Canada said Friday the country's Gross Domestic Product rose 0.4% in November, to beat economists' expectations for 0.3% growth and in the process registering its third straight monthly increase.
Elsewhere, StatsCan said its Industrial Product Price Index fell 0.1% and its Raw Material Price index skidded 1.7%, due to lower petroleum prices.
The Canadian dollar swooned 0.27 cents to 93.50 cents U.S.
ON BAYSTREET
All but two of the 14 TSX subgroups were lower on the day. Metals and mining suffered the most, off 3.6%, while materials tanked 3.4% and gold slid 3.3%.
The two gainers proved to be consumer discretionary and health-care stocks, each up 0.2%.
The TSX Venture Exchange stepped back 9.71 points to 1,492.09, while the Nasdaq Canada index fell back 15.83 points to 685.07.
ON WALLSTREET
In New York, stocks tumbled Friday, with the tech-heavy Nasdaq leading the way down, as investors bet that the strong economic growth seen in the fourth quarter of last year can't be sustained.
The Dow Jones industrial average fell 53.13 points to 10,067.33, to finish January down nearly 3%, its biggest monthly loss since February 2009.
The S&P 500 index sank 10.66 points to 1,073/87. The Nasdaq composite took it on the chin 31.65 points to 2,147.35, hurt by a 4.4% decline in Apple Inc., which has been under pressure since unveiling its new iPad tablet computer.
Better-than-expected readings of U.S. gross domestic product and profits at Microsoft Corp. failed to elicit much response from investors, with many content to hang on to their profits from the market's big gains in 2009.
The Dow's losses were tempered by gains of more than 2% each in Wal-Mart Stores Inc., Home Depot Inc. and DuPont Co.
Stocks rallied through the morning as the stronger-than-expected GDP report seemed to soothe some of the market's recent worries. Better-than-expected readings on consumer sentiment and manufacturing also gave stocks an initial pop.
But the worries of the last two weeks resurfaced as the session wore on. Last week's selloff was sparked by worries about China's bank reserves and the Obama administration's plan to restrict trading by big banks.
The stock selloff was fairly broad-based, although technology led the way. Intel, Microsoft, IBM, Apple and Hewlett-Packard were among the big decliners.
Two tech bellwethers reported results after the close of trade Thursday.
Dow component Microsoft reported higher quarterly sales and earnings that beat estimates, thanks to strong sales of Windows 7, the company's newest operating system. Nonetheless, shares fell 4% in the big tech selloff.
Amazon.com reported higher quarterly sales and earnings that topped estimates. Shares fell 1% Friday.
With 220 companies, or 44% of the S&P 500 having already reported results, earnings are on track to have grown 206% from a year earlier, according to the latest estimates from earnings tracker Thomson Reuters. Revenue is on track to have grown 7% versus a year earlier.
Companies are benefiting from continued cost-cutting in the aftermath of the recession and from easy comparisons to the prior year. The fourth quarter of 2008 was the worst for quarterly profits in Thomson's 15-year history.
However, much of the year-over-year growth is concentrated in the financial sector, which reported a loss in 2008 and is on track to report big profits for 2009. Strip out financial sector earnings and overall earnings growth drops to 15%, while revenue growth drops to 2%.
Economically speaking, Gross Domestic Product, which is the broadest measure of the economy, grew at a 5.7% annual rate in the fourth quarter, better than forecast and more than double the pace it grew in the third quarter. Economists surveyed by Briefing.com thought GDP would grow at a 4.7% annual rate after it grew at a 2.2% rate in the previous quarter.
In other economic news, the consumer sentiment index from the University of Michigan rose to 74.4 from 72.8 previously. Economists surveyed by Briefing.com thought it would rise to 73, according to Briefing.com estimates.
The Chicago PMI, a regional reading on manufacturing, rose to 61.5 from 58.7 previously. Economists thought it would fall to 57.2.
President Obama was set Friday to unveil a $33-billion U.S. package of tax credits aimed at sparking more job growth. The plan includes providing a $5,000 U.S. tax credit for each net new employee a business hires.
Treasury prices moved upward, lowering the yield on the 10-year note to 3.60% from Thursday’s 3.65%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil lopped off 84 cents to $72.80 U.S.
Gold prices lost two dollars to $1,083 U.S.
