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Market sinks like stone
(Baystreet Stock Market Update (Canada) Via Acquire Media NewsEdge) Slowing economy to blame
The Toronto stock market hurtled earthward midday Tuesday amid worries that economic momentum is faltering in the United States and China.
The S&P/TSX Composite Index had tumbled by noon 137.93 points, or 1.2%, to 11,880.57
The Canadian dollar listed lower by 0.63 cents, below parity with its American neighbour, at 99.63 cents U.S.
Double-digit economic growth in China has been key to lifting the global economy from the sharp economic slowdown that followed the 2008 financial crisis. And strong demand for commodities has lifted prices for oil and metals and energy and mining stocks on the resource-heavy TSX.
But Chinese demand has weakened following government controls imposed to cool inflation and steer growth to a more sustainable level.
The latest reading on Chinese economic growth comes out on Friday.
China's flagging demand is a bad sign for Canadian, Australian, Brazilian and Asian economies that count on Chinese customers to buy oil, copper, iron ore and industrial components.
Economic worries have driven the TSX lower for the past five weeks, leaving the main index up less than 100 points so far this year.
The base metals sector benefitted, as copper prices were unchanged at $3.74 a pound after falling almost 5% over the past week. The metal is widely viewed as an economic barometer as copper is used in so many industries. Teck Resources climbed 40 cents to $34.85.
The tech sector provided lift as Research In Motion Ltd. ran ahead 22 cents to $13.20.
In the gold sector, Barrick Gold Corp. rose 34 cents to $41.14.
Energy stocks such as Suncor Energy gained 22 cents to $30.53.
Telecom and industrial stocks were the major decliners with BCE Inc. down 31 cents to $39.75 while Canadian National Railways gave back 55 cents to 77.16.
ON BAYSTREET
The TSX Venture Exchange fell 23.32 points to 1,425.33, while the Nasdaq Canada index tumbled 5.78 points to 393.
The 14 Toronto subgroups had faded into the red by midday. Energy stocks staggered 2.2%, global base metals 1.6%, and financials, 1.2%.
ON WALLSTREET
In New York, investors remained nervous Tuesday, and stocks ticked lower in midday trading.
Worries about Europe bubbled back to the surface, as borrowing costs in Spain and Italy continue to rise.
The Dow Jones Industrials erased 146.60 points, or 1.1%, to break for lunch at 12,783.
The S&P 500 deducted 18.54 points to 1,363.66, and the Nasdaq reversed 39.69 points from Monday's close at 3,007.39.
In all, 25 of the Dow's 30 components moved into the red by late morning. Oil and industrial stocks saw the sharpest drops. Chevron, Caterpillar and Exxon fell more than 1%.
Aluminum producer Alcoa will post first-quarter financial results after the market closes.
Worries about the materials sector are looming amid growing fears about a slowdown in China. Analysts are predicting a 14.5% drop in earnings for this sector, according to FactSet.
Shares of electronics retailer Best Buy surged then dropped roughly 3% after the company announced that CEO Brian Dunn resigned and the company would begin a search for a new CEO.
Sony shares dropped after the electronics maker announced it expects an annual loss of more than double its previous projection. The company said the revision came after recording additional tax expenses, primarily in the United States.
Shares of AIG were up 2% while Dell edged up 2% following analyst upgrades.
Shares of grocery retailer Supervalu were up 13%, after the company reported earnings that beat expectations and offered strong guidance.
Apple's shares hit another all-time high Tuesday.
Yields on Spain's 10-year bonds hovered just under 6%, the highest level in more than three months. Borrowing costs have been trending higher as the government struggles to push through budget cuts. In Italy, the yields were near 5.7%.
Meanwhile, investors are also awaiting the start of earnings season. Dow component Alcoa is on tap to report after the closing bell, which unofficially starts the release of first-quarter financial results.
Analysts are forecasting a 0.1% drop in first-quarter earnings for companies in the S&P 500 compared to a year earlier, according to FactSet. While that's not a major decline, it would mark the end of a nine-quarter winning streak. Stocks were on a tear in the first three months of this year, with the Dow and S&P 500 enjoying their best first quarter in over a decade.
Economically speaking, wholesale inventories came in higher than expected for February with a 0.9% increase above the 0.5% rise forecast by economists. Inventories rose 0.4% in January
On Monday, Federal Reserve chairman Ben Bernanke said in a speech in Georgia that banks need to increase their capital buffers in order to ensure stability in the financial system.
The price on the benchmark 10-year U.S. Treasury progressed, driving yields down to 1.98% from Monday's 2.04%. Treasury prices and yields move in opposite directions.
Oil for May delivery ditched $1.46 to $101.00 U.S. a barrel.
Gold futures for April delivery dropped $6.50 to $1,637.40 U.S. an ounce.
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