North American markets lost hundreds of points Thursday afternoon amid a widespread selloff sparked by weak economic reports from around the globe that spooked already-jittery investors with the spectre of another recession.
The S&P/TSX Composite Index ended the day off 392.90 points, or 3.1%, to 12,186.71
The Canadian dollar let loose 0.14 cents to 101.13 cents U.S. , after drifting toward parity with its American cousin for much of the day.
The fears sent gold up to its latest record high, but even the gold-heavy materials sector couldn’t avoid the selloff, losing ground on the TSX. Shares in Goldcorp Inc. lost 92 cents to $49.38.
Copper fell six cents to $3.95 U.S. a pound. Overall, the mining sector was the hardest hit on the TSX, with shares in miner Teck Resources Ltd. off 7%, or $2.96, at $39.37.
The energy sector tanked on the TSX, with shares in Suncor Energy Inc. off 6.5%, or $2.06, at $29.67.
The lows of the year on the Toronto market were hit last Monday when a plunge of almost 500 points pushed the TSX down almost 20% from its most recent highs from early March, presenting investors with a host of stocks beaten down in price.
That’s when the CBOE’s widely watched volatility index, which measures investor fear, surged to almost 50. On Thursday, it was close to that level at 41.
Meanwhile, Mosaid Technologies Inc. was one of the few gainers on the TSX. Its shares rose 23.9%, or $7.57, to $39.22 after it recommended shareholders take no action on a $480-million unsolicited takeover bid by Wi-LAN Inc. Mosaid said it wants to review the offer before responding to the bid that would combine Canada’s two leading patent companies. Wi-LAN shares were down 5.9%, or 42 cents, at $6.67.
On matters economic, Statistics Canada reported that June’s wholesale sales inched 0.2% up to $47.8 billion following a 2.0% advance in May. Also in June, the number of Employment Insurance recipients remained static around 577,000.
Elsewhere, the agency’s composite leading index rose 0.2% in July after a 0.1% gain in June. Last month, six of the 10 components advanced, one more than in May.
ON BAYSTREET
The TSX Venture Exchange dropped 49.56 points to 1,770.63 while the Nasdaq Canada index slid 19.64 points to 474.31
In Toronto, all 14 subgroups ended the day in negative territory. Global base metals jettisoned 5.7%, metals and mining issues were off 5.6% and energy lost 5.4%.
ON WALLSTREET
In New York, equities got socked on Thursday as renewed concerns about the U.S. and global economies sent major indexes plunging, pushed gold to a new high and bond yields to a record low.
Stocks were walloped by bad news on multiple fronts. Morgan Stanley put out a dismal forecast for global economic growth. A key reading on U.S. housing came in worse than expected. And a report showed a significant slowdown in the domestic manufacturing sector.
Investors rushed to move their money into safe U.S. government bonds -- and the yield on the benchmark 10-year Treasury briefly fell below 2%.
The Dow Jones Industrials plunged 419.63 points, or 3.7% to finish at 10,990.60
The S&P 500 shed 53.24 points to 1,140.65, while the Nasdaq chucked 131.05 to 2,380.43.
At the centre of Thursday's selloff were renewed macroeconomic fears about a possibly slowing global economy
The gloomy report from Morgan Stanley renewed barely-subsided fears over a slowing global economic recovery. The investment bank slashed its global growth outlook for 2011 and 2012, adding that the United States and Europe are "hovering dangerously close to a recession."
Morgan Stanley cut its GDP forecast to 3.9% in 2011 and 3.8% in 2012, down from 4.2% and 4.5%, respectively. Growth will be particularly sluggish in developed nations, with GDP averaging an increase of 1.5%
Shares of Dow component Hewlett-Packard dropped 8% after the company cut its full-year outlook and said it was looking to spin off its PC business. The company also said it was in talks to possibly purchase British software company Autonomy.
The tech giant also reported its quarterly results, posting an adjusted profit of $1.10 U.S. a share versus the $1.09 U.S. that analysts had expected.
Shares of McGraw Hill dropped 7% after a New York Times report said the Justice Department was investigating rating agency Standard & Poor's, a subsidiary, for allegedly overrating mortgage-backed securities. The mortgage securities meltdown led to the 2008 financial crisis.
The stock price for Sears Holdings fell more than 6% after the retailer reported a disappointing quarterly loss of $1.13 U.S. per share.
On the economic front, investors received an unpleasant surprise, when the U.S. Labor Department reported that weekly jobless claims were worse than expected.
The government reported that jobless claims rose by 9,000 to 408,000 in the week ended Aug. 13. Economists surveyed by Briefing.com had forecasted a rise of 5,000 to 400,000 claims.
Americans paid more for consumer goods and services in July, as inflation rose more than expected over the month. The Consumer Price Index, rose 0.5% in the month -- led by a 4.7% increase in gas prices from month to month.
Economists expected a 0.2% rise in July, according to a survey from Briefing.com.
Elsewhere, the Philadelphia Federal Reserve's regional index plunged to a reading of minus 30.7 in July, showing severe contraction in economic activity last month. The number was far worse than expected, with economists expecting a reading of plus 0.5.
It was the worst reading on that indicator since March 2009, when the U.S. economy was still in recession.
The National Association of Realtors said existing home sales dropped by 3.5% in July, far worse than the 2% rise that the market was looking for.
The price on the benchmark 10-year U.S. Treasury jumped, pushing the yield down to 2.08% from 2.16% late Wednesday. Prices and yields move in opposite directions.
Oil for September delivery dumped $6.28 to $81.30 U.S. a barrel
Gold futures for December delivery rose $28.20 to settle at $1,822 U.S. an ounce, a new closing high (not adjusted for inflation) for the precious metal.
