The Toronto stock market was sharply lower late Tuesday as commodity prices backed off and new doubts cropped up about how much strength the consumer can lend to the U.S. economic recovery.
The S&P/TSX composite index stumbled 108.04 points to end the day at 11,526.71
A 75-point decline on Monday broke an eight-day string of gains that had sent the TSX up over 5% on an improved outlook for the American economy.
Investors hoping to find further evidence of strength were disappointed when the U.S. Conference Board reported that its consumer confidence index fell this month (see below).
The TSX energy sector lost gumption as oil prices fell back after rallying 15% over the last three weeks on hopes that improving economic conditions would lead to higher demand. Suncor Energy backed off 74 cents to $30.81 and Canadian Natural Resources moved 93 cents lower to $71.09.
The base metals sector stepped back with the March copper contract off nine cents to $3.22 U.S. a pound. Teck Resources slipped $1.21 to $38.51 while HudBay Minerals lost 47 cents to $13.09.
The TSX gold sector was down, as Barrick Gold Corp. lost 70 cents to $39.37 while Goldcorp Inc. was down $1.25 at $38.45.
The financials sector was lower with Royal Bank down 55 cents to $56.05 and Manulife Financial declining 14 cents to $19.34.
In other earnings news, Calgary-based TransCanada Corp. shares climbed 28 cents to $34.93 after it reported a 37.5% improvement in fourth-quarter profit to $381 million. TransCanada increased its quarterly dividend to 40 cents per share, the equivalent of $1.60 per year, up 5%. The company’s revenue declined 5.4% to $2.2 billion.
Canadian bakery giant George Weston Ltd. reported its net earnings slid to $82 million in the fourth quarter. That was down sharply from $405 million a year ago when it booked gains from the sale of its Neilson Dairy business. Quarterly sales fell 6.4% to $7.5 billion, also impacted by the sale of the dairy division, but its shares climbed 80 cents to $71.50.
Meanwhile Sears Canada Inc. handed in a $128.2-million profit in its most recent quarter, a 29% increase from the year-earlier period. The Toronto-based retailer’s same-store sales decreased by 1.7%. Sears Canada shares rose 15 cents to $25.90.
The Canadian dollar slid 1.21 cents to 94.69 cents U.S.
ON BAYSTREET
All but four of the 14 TSX subgroups dipped Tuesday. Metals and mining weighed heaviest, losing 2.4%, materials were off 2.1%, and gold lost 2%.
Of the gainers, consumer staples picked up the most, at 0.5%, while telecoms improved 0.3% and health-care stocks gained 0.2%.
The TSX Venture Exchange stumbled 8.48 points to 1,519.99, while the Nasdaq Canada index lost 14.75 points to 731.13.
ON WALLSTREET
In New York, stocks tumbled Tuesday after a key measure of consumer confidence plunged, reflecting investors' growing pessimism about the strength of the economic recovery.
The Dow Jones industrial average fell 100.97 points, or 1%, to 10,282.41. The S&P 500 index tailed off 13.41 points to 1,094.60, and the Nasdaq composite fell back 28.59 points to 2,212.93.
A mixed market turned negative after the late morning release of a weaker-than-expected reading on consumer confidence. The report reflected investor wariness this year amid some conflicting readings on the economy, debt issues at home and abroad, and lawmaker squabbling in Washington.
Stocks have been choppy lately, with the major indexes declining for four weeks, advancing for two weeks and then slipping again Monday -- despite some upbeat earnings and an $11-billion U.S. merger in the oil services sector.
The Volatility index, Wall Street's so-called fear factor, rose 9% Tuesday as nervousness grew about the strength of the recovery.
One observer said that the consumer confidence number is one of the more forward-looking readings and is raising worries that the consumer -- already struggling in a battered labour market -- might pull back even more.
Economically speaking, the Conference Board said its index fell to 46.0 in February from 56.5 in January. Economists surveyed by Briefing.com thought it would fall to 55.
Elsewhere, investors were hardly encouraged by the latest reading from the housing front as home prices fell 2.5% during the final three months of 2009, according to the S&P/Case-Shiller Home Price Index released Tuesday.
The latest numbers suggest that the decline in home values seen over the last several years may finally be stabilizing.
On the jobs front, the Senate voted Monday to move forward on a $15-billion U.S. jobs creation bill that would give businesses a tax break for hiring the unemployed and fund highway and transit programs through 2010.
After a huge runup in 2009 based on expectations for a strong recovery in 2010, investors are now looking for proof that such a recovery will take hold.
A mixed batch of economic readings has put some doubt in the market this year, while better-than-expected fourth-quarter earnings and revenues have had little impact on investor sentiment.
China's decision to temper growth by limiting bank loans and fears of Greece's debt crisis spreading to other European nations have also played a role in the market's seesawing.
Last week, the Federal Reserve surprised investors by boosting the discount rate, the emergency bank lending rate, by a quarter-percentage point, to 0.75%.
It was the first change in interest rates in over a year and signaled the very early stages of the Fed returning to a more normal phase of monetary policy. However, the move was largely symbolic, as the discount rate is rarely used.
Fed Chairman Ben Bernanke testifies on Capitol Hill Wednesday and Thursday. He is expected to discuss the economy and monetary policy, but investors will be listening to see if he says anything more about the central bank's plans to close out some of the emergency programs put in place during the height of the financial crisis.
Over 700 banks are at risk of failing, according to a report from the Federal Deposit Insurance Corp. published Tuesday. The FDIC said that the number of banks on its so-called problem list has climbed to 702, the highest number in 6 1/2 years.
The number has increased steadily since the start of the recession in December 2007. However, only a small percentage of banks identified as being in danger end up failing.
A number of retailers reported results Tuesday morning, including Dow component Home Depot.
Home Depot said it returned to a profit in its fiscal fourth quarter after posting a loss a year earlier, with earnings of 18 cents per share, two cents better than expected. Home Depot also boosted its dividend. But the company gave a cautious 2010 outlook amid the still-fragile economic recovery.
Target and Sears Holdings also reported better-than-expected quarterly profit. Sears is the operator of Sears and Kmart.
Treasury prices increased sharply, lowering the yield on the 10-year note to 3.68% from 3.79% late Monday. Treasury prices and yields move in opposite directions.
The price of a barrel of oil moved downward $1.54 to $78.77 U.S.
Gold prices gave back $10 to $1,103 U.S.
