The Toronto stock market moved lower Tuesday afternoon after the U.S. Federal Reserve said it was keeping interest rates at historic levels near zero -- and repeated its pledge to keep rates low for an extended period of time.
The S&P TSX Composite Index got to within sight of breakeven, but fell short 25.27 points to 11,838.29 by the close.
The base metals sector declined as worries about falling Chinese demand pushed the September copper contract in New York down four cents to $3.31 U.S. a pound in the wake of the Chinese data. Thompson Creek Metals declined 41 cents to $9.80 while Equinox Minerals lost eight cents to $4.80.
The TSX energy sector lost ground as Canadian Natural Resources stepped back 72 cents to $36.13.
The gold sector was slightly higher as Goldcorp Inc. leaped 39 cents to $41.69.
The financial sector was also weak with shares in Manulife Financial fell 26 cents to $14.01 after DBRS downgraded its long-term debt and preferred share ratings to AA (low) from AA. The ratings agency said that earnings volatility is expected to continue at elevated levels.
The downgrade follows a $2.4-billion quarterly loss that the insurer reported last week, which sent its stock down by around 14%.
In other corporate news, Saudi Arabia’s telecommunications regulator on Tuesday said it would allow BlackBerry services to continue in the kingdom, citing “positive developments” in talks with manufacturer Research In Motion Ltd.
The Communications and Information Technology Commission’s announcement staves off, at least for now, a potential ban of BlackBerry Messenger in the country -- a step which officials had said was possible because of national security concerns. RIM advanced 99 cents to $57.79.
One of the largest shareholders in Maple Leaf Foods Inc. is selling a 10% stake in the big Canadian food processor. Ontario Teachers’ Pension Plan says private equity fund West Face Capital Inc. will acquire the shares of Maple Leaf for an undisclosed sum.
The transaction will effectively clear Teachers’ holdings of both non-voting common shares and warrants in the company, and reduces Teachers’ share in MFI to about 25%. Maple Leaf shares gained 44 cents to $9.44.
Shares in CI Financial Corp., one of Canada’s largest mutual fund companies, were down 37 cents to $18.98 after the company reported its second-quarter profits rose to $89 million from $52.9 million a year ago. Assets under management increased to $63.5 billion from $53.7 billion.
Casey’s General Stores has completed a $569-million U.S. private placement to fund its self-tender offer against Alimentation Couche-Tard’s hostile takeover bid. Quebec-based Couche-Tard has extended its $36.75 U.S. per share offer until Aug. 30. Alimentation lost 39 cents to $20.92.
In economic news, Statistics Canada said the New Housing Price Index (NHPI) rose 0.1% in June, after advancing 0.3% in the previous month. On a yearly basis, the NHPI was up 3.3% in June following a 2.9% increase in May.
In another report, Canada Mortgage and Housing Corp. said housing starts in the nation fell to a seasonally adjusted annualized rate of 189,200 units in July from a revised 192,300 in June.
Analysts were expecting for 186,500 starts in July.
The Canadian dollar skidded 0.45 cents to 96.93 cents U.S.
ON BAYSTREET
All but three of the 14 TSX subgroups were lower. Global base metals dropped 1.8% of their strength, while metals and mining issues were lower by 1.5%, and industrials doffed 0.6%.
The three gainers were gold, up 0.6%, health-care, ahead 0.2% and telecoms, 0.1% to the good.
The TSX Venture Exchange fell 4.88 points to 1,464.15, while the Nasdaq Canada index nosed up 0.88 points to 648.26
ON WALLSTREET
In New York, stocks pared losses, with the Dow briefly moving into positive territory Tuesday after the Federal Reserve took a cautious stance about the recovery.
The Dow Jones industrial average gave back 54.50 points to close at 10,644.25
The S&P 500 index ended lower 6.73 points to 1,121.06, while the tech-rich Nasdaq composite index dropped off 28.52 points to 2,277.17
As was widely expected, the central bank said it would leave short-term interest rates unchanged in a range between 0% and 0.25%. But the Fed gave its most bearish outlook in more than a year, saying the economic recovery is weakening.
The Fed also said it plans to reinvest its debt into longer-term Treasury securities. Economists had been anticipating the Fed would start unwinding its purchases by the end of this year.
The session's earlier losses were led by tech shares after the sector suffered two downgrades of big chipmakers.
Analysts at Robert W. Baird downgraded tech giant Intel's shares to "neutral" from "outperform." The research firm cited concerns about the overall tech sector, noting a "sharp deterioration in PC-related order trends over the past week, following a below-expectation July."
JPMorgan analysts echoed this statement, saying in their own report that personal computer orders were "falling off a cliff." JPMorgan lowered its outlook on Intel but kept its rating at "neutral."
Intel shares were off 3.6% in late trade.
Advanced Micro Devices also felt the crunch, after Barclays downgraded shares of the semiconductor maker to "equal weight" from "overweight." AMD shares plummeted 7.7% on the news.
BP said late Monday that it had made a $3-billion U.S. deposit into the $20-billion escrow account, from which the oil giant will pay for claims to those who suffered from the effects of the Gulf Coast oil spill. Shares of BP were down 1.8% in afternoon trading.
Walt Disney Co. is expected to report fiscal third-quarter earnings after the bell. Analysts polled by Thomson Reuters expect the media giant earned 58 cents U.S. per share, up 12% from a year ago, on revenues of $9.4 billion U.S.
Economically speaking, investors were disappointed by a report showing business productivity unexpectedly fell 0.9% in the second quarter, marking the first decline in 18 months. Economists expected growth to slow to 0.1% from an upwardly revised 3.9% in the first quarter, according to a consensus estimate from Briefing.com.
A separate report showed wholesale inventories fell 0.7% in June. Economists expected an increase of 0.4% during the month, following a 0.5% hike in May.
Treasury prices gained strength, lowering yields for the benchmark 10-year note to 2.78% from Monday’s 2.82%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil was $1.29 down to $80.19 U.S.
Gold prices regained four dollars to $1,206 U.S. an ounce.
