Falling mining and industrial stocks helped push the Toronto stock market lower Wednesday while nervous investors hoped that the U.S. Federal Reserve will unveil new measures to keep the economy from slipping back into recession.
The S&P/TSX Composite got bruised Wednesday, falling 254.87 points, or 2.1% to 11,955.01
The Canadian dollar shed 1.32 cents to 99.43 cents U.S., below parity with its American cousins for the first time in months, as risk aversion sent investors to the safe haven status of U.S. Treasurys.
The base metals sector took a hit with December copper ahead two cents to $3.72 U.S. a pound.
Teck Resources dropped $1.83, or 5.1%, to $34.28 and First Quantum Minerals fell $1.10, or 6.1%, to $16.84.
The drop in mining stocks came after Tom Albanese, the chief executive officer of mining giant Rio Tinto PLC, said some of the company’s customers are requesting delays in metals shipments.
He told the Financial Times that "it is noticeable that markets are somewhat weaker" and that this is "consistent with customers being cautious about the current state of business."
Also, the International Monetary Fund said Tuesday it was further downgrading economic growth prospects for a variety of countries, including Canada and the U.S.
Railroad stocks pushed the industrials sector down as Canadian National Railways declined $2.89, or 4.2%, to $65.74 and Canadian Pacific Railway shed $2.81, or 5.5% to $48.01.
The energy component lost ground as Cenovus Energy gave back $1.16 to $31.51 while EnCana Corp. declined 91 cents to $21.78.
Canada-based Pacific Rubiales Energy Corp. has halted pumping of 225,000 barrels of oil a day from its operations in Colombia because union workers protesting for pay raises and better health care have blocked roads in the region. It says the field that was idled Tuesday in southern Colombia accounts for a quarter of the South American nation’s oil production.
Pacific Rubiales’ shares dipped 87 cents to $24.48.
Gold issues such as Barrick Gold Corp. backtracked 12 cents to $53.60.
On matters economic, figures released by Statistics Canada revealed this morning that the consumer price index was running at 3.1% in August, Statistics Canada said Wednesday. Economists had been expecting a reading of 2.9% following the 2.7% seen in July.
ON BAYSTREET
The TSX Venture Exchange fell back 24.09 to 1,703.78, while the Nasdaq Canada index was down 16.81 points to 466.38
All 14 Toronto subgroups ended the day down. Metals and mining stocks dropped 5.8%, while global base metals faded 4.4%, and industrials were off 3.7%.
ON WALLSTREET
In New York, stocks fell sharply after the Federal Reserve made it official -- no change in rates and Operation Twist is a "go".
The Dow Jones Industrials jettisoned 283.82 points, or 2.5%, to end at 11,124.80, with all but one of the blue-chip index's 30 components in the red.
Hewlett-Packard was the only Dow component trading higher amid rumours that HP's board is considering a shakeup that would include replacing current CEO Leo Apotheker.
The S&P 500 moved down 35.33 points to 1,166.76, while the Nasdaq unloaded 52.05 points to 2,538.19
Stocks fell to their lowest levels of the day after the Fed said it will shift $400 billion U.S. of short-term Treasurys into long-term Treasurys in an effort to boost lending and spur the economy.
The Dow Jones Transportation Average, a collection of 20 truckers, shippers, railroads and airlines, tumbled 4%, with railroad giants CSX Corp. and Norfolk Southern leading the decline.
In yet another blow to the financial sector, Moody's Investors Services announced the downgrade of Citigroup, Wells Fargo, and Bank of America, three of the United States' top banks.
Shares of BofA fell 5% following the rating agency's move. Shares of Wells Fargo slipped 2%, and Citigroup's stock fell 3%.
Shares of General Mills edged up more than 3% after the company reported better-than-expected earnings and reaffirmed its guidance
Software maker Adobe Systems' stock rose 3% after the software maker beat third-quarter earnings estimates and raised its revenue guidance after the closing bell Tuesday.
Shares of Alpha Natural Resources dropped 15% after the coal producer cut its shipment forecast for the year. Stocks of other coal giants, including Patriot Coal, Arch Coal, Consol Energy and Peabody Energy, also fell sharply.
Retailer Bed Bath & Beyond will post results after the market close.
While the Fed said it will also reinvest the proceeds from maturing mortgage-backed securities into more mortgage-backed securities, one expert said that additional step is still lacking.
What would help satisfy financial markets is if the Fed were to bite the bullet and pump more money into the economy with another round of Treasury buying, or QE3, he added.
But experts said the Fed, which is running out of policy tools, will probably hold back from expanding its balance sheet unless investors and consumers grow warier.
In addition to the Fed, investors will continue to monitor the developing situation in debt-stricken Greece.
Evangelos Venizelos, the Greek finance minister, carried on two days of conference calls with the International Monetary Fund, European Council and European Central Bank.
The talks ended without any definitive deal but Venizelos is due to carry on further discussions this weekend in Washington, D.C., where the IMF and World Bank are holding their annual meetings, and the so-called troika is expected to head to Athens next week.
Economically speaking, the National Association of Realtors will release its August existing home sales data after the opening bell. Economists surveyed by Briefing.com expect sales to have edged up to an annual rate of 4.70 million in August from 4.67 million in July.
The price on the benchmark 10-year U.S. Treasury gained ground, pushing the yield down to 1.88% from Tuesday’s 1.95%. Treasury prices and yields move in opposite directions.
Oil for October delivery regained $1.41 to $85.51 U.S. a barrel.
Gold futures for December delivery fell $1.00 to settle at $1,808.10 U.S. an ounce
