Stocks on Bay Street took a beating Monday -- as investors took profits after a big run-up last week while tumbling oil prices and dismal manufacturing reports worldwide added to fears of a prolonged global recession.
The S&P/TSX composite index was down 864.41 points to 8,406.21. Its worst drop since the market crash of 1987.
Fairfax Financial Holdings Ltd. slipped after it said it plans to buy up the stake in commercial insurer Northbridge Financial Corp. it doesn't already own for $686 million.
Air Canada, facing a cash crunch, has struck a deal with its former frequent flyer program that will inject about $70 million into the airline by the end of the year.
On the data front -- Statistics Canada reported that economic growth expanded 0.1 percent in September, which most economist believe was the last month of growth before what could be a prolonged period of decline. The third quarter of the year showed 0.3 percent growth in gross domestic product.
Down south -- manufacturing activity in the United States declined at the fastest pace in 27 years in November, the Institute for Supply Management reported Monday. The ISM index fell to 36.2 percent in November from 38.9 percent in October. It's the lowest since early 1982. Economists were expecting the ISM index to fall to 37 percent.
Also -- October construction spending fell 1.2 percent versus a flat reading in the previous month. Economists thought spending would drop 1 percent.
The U.S. economy has been in recession for about a year, according to the research organization that tracks economic cycles. In a statement, the National Bureau of Economic Research said its Business Cycle Dating Committee determined that the U.S. entered recession in December 2007, marking the end of the economic expansion that began in November 2001. That month marked the end of the last recession for the U.S. economy.
The Canadian dollar, meanwhile, was trading down 0.16 cent to 80.37 cents US.
BAYSTREET
All of the TSX sub-groups traded lower today -- gold stocks fell 13.82 percent followed by a 13.32 percent dip in energy issues and a 11.90 percent drop in mining stocks.
COMEX gold for February delivery fell $42.20 to $776.80 US an ounce.
Meanwhile, the TSX Venture Exchange slipped 27.23 points to 739.12 and the NASDAQ Canada was off 27.98 points at 403.35.
ON WALLSTREET
Stocks in New York suffered a merciless beatdown Monday, as the Bureau of Economic Research confirmed what many had suspected -- the U.S. has been in a recession for nearly a year.
The Dow Jones Industrial Average tumbled 679.95 points, or 7.7 percent, to 8149.09, and the S&P 500 fell 80.05 points, or 8.9 percent, to 816.19. The Nasdaq sank 137.5 points, or 9 percent, to 1398.07.
GM and Ford gained last week on growing bets that they, along with Chrysler, will receive a government bailout. But the stocks tumbled Monday in tune with the broader market. The auto industry's first pitch to Congress was rebuffed, but there is increased speculation that its second pitch will be more successful.
Johnson & Johnson said it will buy breast implant maker Mentor for $1.07 billion, or $31 a share, nearly double the company's closing price from Friday. Dow stock J&J fell 3 percent, while Mentor gained 89 percent.
Longer-dated U.S. Treasury securities were rising in price. The 10-year note was gaining 1-26/32 to yield 2.72 percent, and the 30-year was up 4-5/32, yielding 3.24 percent. The American dollar was rising vs. the euro and pound but falling against the yen.
U.S. light crude oil for January delivery fell $5.15 to settle at $49.28 US a barrel on the New York Mercantile Exchange.
