TORONTO - A wave of pentup selling on the Toronto stock market sent the main index down almost 300 points Thursday as energy stocks sold off and oil headed lower.
"The news out there is negative and there's a lot of uncertainty as to when we're going to see some sort of stabilization -- not even reacceleration, just stabilization in the global economies," said Jennifer Dowty, portfolio manager at MFC Global Investment Management.
"In the meantime, no one wants to step up. As a result people are flocking to safety, flocking to bonds at the expense of equities -- equities are collapsing."
Toronto's S&P/TSX composite index closed down 298.76 points to 8,425.35 on heavier than usual volume as the exchange resumed business after being halted Wednesday by a technical problem.
Worries about a possible downgrade of General Electric stock and anxiety about a bailout for the auto industry sent New York markets lower with the Dow Jones industrial average down 219.35 points to 8,604.99.
Shares in TMX Group (TSX:X), operator of the TSX and TSX Venture Exchange, declined 39 cents to $24.21. The company blamed its day-long halt on "technical issues with data feeds."
General Motors Corp. (NYSE:GM) was a major loser among the 30 Dow industrials, plunging 16.25 per cent, or 71 cents to US$3.66, as the Bush administration said it is considering an "orderly" bankruptcy in the struggling U.S. auto industry. Meanwhile, GM denied a report it had restarted talks to merge with Chrysler.
Shares of GE closed down $1.43 to US$15.96 after ratings agency Standard & Poor's says there is a chance that General Electric Co. could lose its coveted Triple-A credit rating in the next two years and lowered its outlook for GE and GE Capital to negative from stable.
The Canadian dollar was down 0.68 cent to 82.88 cents U.S. Negative economic data kept coming, while Federal Finance Minister Jim Flaherty appointed an 11-member economic advisory council which includes former B.C. finance minister Carole Taylor and businessmen James Irving and Jim Pattison.
The energy sector led TSX losses, falling 7.6 per cent as the January crude contract in New York, which expires Friday, slid $3.84 to US$36.22 a barrel as pessimism about demand outweighed OPEC's decision to cut daily output by 2.2 million barrels. The February contract declined $2.94 to US$41.67.
EnCana Corp. (TSX:ECA), closed down $2.58 to $54.50. Suncor Inc. (TSX:SU) shed $1.91 to $24.80.
The TSX Venture Exchange was off 23.01 points to 700.45.
Statistics Canada reported its composite leading index fell 0.7 per cent in November. It was the third straight retreat, and the largest since January 1991, for the forward-looking index. Statistics Canada also tallied a sharp 0.9 per cent decline in October retail sales, pulled lower by price reductions.
"The slide in Canadian retail sales is expected to take on a more ominous tone in coming months, undercut by job losses, wealth destruction and sagging consumer confidence," warned BMO Capital Markets economist Doug Porter.
In New York, the Nasdaq composite index edged 26.94 points lower to 1,552.37 while the S&P 500 index dipped 19.08 points to 885.34.
FedEx Corp. said its quarterly earnings rose three per cent, narrowly topping expectations. But the delivery service said it is "increasingly being challenged by some of the worst economic conditions in the company's 35-year operating history" and its shares fell $1.37 to US$62.60.
The TSX financial sector moved down 2.2 per cent as National Bank (TSX:NA) added to its string of losses, down $2.14 to $25.62 while Royal Bank (TSX:RY) surrendered 41 cents to $34.25.
The base metals sector tumbled seven per cent as Teck Cominco Ltd. (TSX:TCK.B) retreated 67 cents to $5.38 and Sherritt International (TSX:S) dropped 38 cents to $11.76.
The gold sector dropped eight per cent as the February bullion contract on the Nymex lost $7.90 to US$860.60 an ounce. Goldcorp Inc. (TSX:G) faded $4.86 to $34.49.
The carmakers' woes pulled down auto parts suppliers. Magna International (TSX:MG.A) was down 26 cents to $35.44 while Linamar (TSX:LNR) dropped 49 cents to $3.66.
Telecom equipment maker Nortel Networks (TSX:NT) was a major loser on the TSX, losing eight cents or 11.8 per cent to 30 cents on continuing worries about the firm's survival.
