TSX plummets to March levels

TSX plummets to March levels

U.S. stocks rise on lower commodities

The Gazette

Published: 6 hours ago

The Toronto Stock Exchange benchmark fell yesterday to its lowest close since March as commodity stocks and financials were sold off.

The S&P/TSX composite index was down 262.21 points, or two per cent, to 13,096.70. The TSX Venture composite index fell 53.85 points, or 2.7 per cent, to 1,937.33.

The stock groupings for energy, materials and financials - representing about three-quarters of the main benchmark's weight - were all down. It was a rare example of broad-based bearishness, with the recent trending being that financial stocks usually gain to offset losses in commodities, or vice versa.

Looking for reasons for the sell-off in commodity stocks, some key prices on the New York Mercantile Exchange were in decline. Crude oil was down $1.24 to $113.77 U.S. a barrel. That put it down almost 23 per cent from the all-time high of 147.27 U.S. reached last month. Gold was down $22.40 to $792.10 U.S. an ounce. The price of bullion has dropped 8.4 per cent in the past five days, the biggest weekly loss in more than 25 years.

The Canadian financials were down probably "because of the broad sell-off of Canadian stocks," said Keith Summers, chief investment officer with Stonegate Private Counsel in Toronto.

Banking and insurance stocks didn't benefit from a shifting of investor money out of resource stocks, as has often been the case lately.

"I'm inclined to think it might have been more foreign investors who are selling Canada completely as opposed to Canadian investors who are getting out of commodities and getting into financials," Summers said.

The TSX energy index was down 3.1 per cent, having the most detrimental effect on the composite. Suncor Energy Inc. fell $2.66, or 4.8 per cent, to $53.34. EnCana Corp. dropped $3.06, or 4.2 per cent, to $70.04.

The materials index was down 4.2 per cent. Goldcorp Inc. fell $1.77, or 5.4 per cent, to $31.16. Uranium producer Cameco Corp. dropped $2.80, or 8.4 per cent, to $30.52 as analysts downgraded the stock on worries of weaker realized uranium prices and flooding at Cameco's Cigar Lake uranium project in Saskatchewan. The biggest loss on the whole exchange, in dollar terms, was from Potash Corp. of Saskatchewan Inc., which was down $10.23, or 5.4 per cent, to $179.90.

The TSX financials index was down 0.5 per cent. Bank of Nova Scotia declined 60 cents, or 1.2 per cent, to $48.89. There was an isolated case of gain among the major banks as Canadian Imperial Bank of Commerce rose 71 cents, or 1.2 per cent, to $61.21.

The Canadian dollar rose 38 basis points to 94.43 cents U.S.

In New York, stocks rose, sending the Standard & Poor's 500 Index to a third weekly gain, as lower commodity prices boosted the outlook for consumer companies and the two largest bond insurers had their credit ratings affirmed.

Wal-Mart Stores Inc.climbed the most in a week as crude slid for a second day,up $1.27 to $59.37.

Ambac Financial Corp. rallied 25 per cent, up $1.12 to $5.68, and MBIA Inc. advanced 8.7 per cent, up 90 cents to $11.22, after S&P concluded a credit review without lowering the companies' ratings.

Eight of 10 industry groups in the S&P 500 advanced as a report showing unexpected growth in New York manufacturing spurred optimism that the economy will pick up as energy and raw material prices retreat.

The S&P 500 rose 5.27 points, or 0.4 per cent, to 1,298.2. The Dow Jones Industrial Average increased 43.97, or 0.4 per cent, to 11,659.9. The Nasdaq Composite Index slipped 1.15 to 2,452.52 as Apple Inc. lost two per cent.

The advance sent the S&P 500 up 0.2 per cent on the week. The benchmark for American equities has lost almost 12 per cent this year as surging commodities and credit-market losses curbed profit growth. Earnings have slumped 23 per cent on average for the 446 companies in the S&P 500 that released second-quarter results since July 8, according Bloomberg data.

General Electric Co. added one per cent to $29.80 and contributed the most to a 0.8-percent-gain in the S&P 500 Industrials Index. The Federal Reserve Bank of New York's general economic index climbed to 2.8, from minus 4.9 a month earlier, and defied economists forecasts for a decrease of minus-4. A separate Fed report showed industrial production increased in July.

J.C. Penney Co. rose the most since February, adding 8.4 per cent to $39.94. Kohl's Corp. rose 7.3 per cent to $51.79. Both U.S. department-store chains reported second-quarter profit above the average analyst estimate by controlling costs amid reduced spending by cash-strapped shoppers.

Exxon Mobil Corp., the largest U.S. energy company, slumped 0.5 per cent to $77.07 for a third-straight weekly drop. Chevron Corp. fell two per cent to $84.25.

Canwest News Service, Reuters, Bloomberg News