TORONTO - Stock markets closed lower Wednesday at the end of another day of big swings after an early attempt to rebound from Tuesday's selloff fizzled.
Investors already feeling the economy is closer to recession following a surprising January contraction in the U.S. service sector were also unsettled by remarks from Federal Reserve Bank of Philadelphia president Charles Plosser.
Plosser said Wednesday that although the weakening economy is a big concern, "we must not lose sight of the other part of the Fed's dual mandate -- which is price stability,'' he said, raising concerns about the pace of future interest rate cuts.
Toronto's S&P/TSX composite index came down from a 135-point surge to close 64.75 points lower to 12,867.2 after plunging 326 points on Tuesday.
In New York, the Dow Jones industrial average also fell from a lead of over a 100 points, declining 65.03 points to 12,200.1. on top of Tuesday's 370-point tumble. The Nasdaq composite index lost 30.82 points to 2,278.75 while the S&P 500 index erased 10.19 points to 1,326.45.
The reversal from positive to negative on markets failed to surprise many analysts.
"There's no catalyst, (so) we drift,'' said Julie Brough, vice-president of private wealth management at Morgen, Meighen and Associates.
"We're in a market where anything goes at any point in time because we don't have any clear, decisive direction and... you can have a great rally or you can just watch it evaporate.''
The TSX Venture Exchange declined 4.31 points Wednesday to 2,505.66.
The Canadian dollar was up a tenth of a cent to 99.39 cents US.
In economic news, Statistics Canada reported that building permits issued by municipalities hit another record high in 2007, rising to $74.3 billion. That was up 12.1 per cent from the previous record in 2006. For December, municipalities issued $6.1 billion worth of permits, up 0.4 per cent from November.
Earnings news had helped persuade bargain hunters into the markets during the morning.
Shares in BCE Inc. were ahead 35 cents to $34.90 after Canada's largest telecom enterprise said again that it expects the takeover by an investment group led by the Ontario Teachers' Pension Plan will close "in the first part of the second quarter.'' There have been stock-market doubts that the parties can raise the money for the $52-billion acquisition.
BCE reported its fourth-quarter revenue was $4.55 billion, little changed from a year earlier, as revenue growth at Bell Canada and Bell Aliant was offset by lower revenue from Telesat.
Tobacco company Rothmans Inc. pulled in a 22 per cent rise in October-December profit to $29.4 million on 11 per cent sales growth. Its shares rose 30 cents to $24.21.
The Walt Disney Co. beat analyst expectations with a nine per cent rise in holiday-quarter revenue to US$10.45 billion.
Time Warner Inc. beat analyst expectations even as quarterly profit declined to US$1.03 billion versus US$1.75 billion a year ago.
On the TSX, the metals and mines sector had headed higher after BHP Billiton Ltd. presented a formal bid for rival miner Rio Tinto Ltd. valued at US$173.6 billion. It is the biggest-ever mining takeover offer, as BHP raised its previous informal proposal for Rio Tinto, the new owner of Canadian-based Alcan. But the index later declined 2.1 per cent as Teck Cominco Ltd. lost $1.15 to $33.48 and Fording Canadian Coal Trust moved down 96 cents to $44.84.
The energy sector was off 1.5 per cent as oil prices fell after the U.S. government reported unexpectedly large jumps in supplies of crude oil and gasoline and a surprise increase in stocks of heating oil.
The March crude contract on the New York Mercantile Exchange was down $1.27 to US$87.14 a barrel. Petro-Canada lost $1.45 to $43.12 and EnCana Corp. eased $1.54 to $65.37.
The financial sector lost early gains to move down 0.5 per cent and Bank of Montreal moved 55 cents lower to $56.15 and CIBC headed $1.67 lower to $68.33.
Gold prices recovered largely from a US$19 slide Tuesday, as the April bullion contract on the Nymex moved up $14.70 US$905 an ounce. The TSX gold sector gained 1.2 per cent as Barrick Gold Corp. climbed 59 cents to $48.79
The industrials sector also supported the TSX, rising one per cent with Bombardier Inc. ahead 23 cents to $4.96.
Enbridge Inc. shares were down 32 cents to $39.88 after a 45 per cent increase in fourth-quarter earnings to $248.6 million, closing out a year in which profit grew 14 per cent to $700.2 million. The pipeline and energy distribution company expects to spend $3.7 billion on capital projects this year, up from $2.3 billion in 2007.
Shares in Cameco Corp., the world's biggest uranium producer, drifted 13 cents lower to $32.19 after it reported its fourth-quarter net income rose to $61 million from $40 million despite lower revenues. Quarterly revenues fell to $494 million from $512 million, but the company said it enjoyed improvements in its core uranium business as well as electricity and gold activities.
Rationalization of Canadian operations, a favourable tax situation and increased contributions from the United States enabled global cheese giant Saputo Inc. to raise its third-quarter profits by 28 per cent to $82 million. Its shares advanced 83 cents to $27.69.
On the markets, declines beat advances 814 to 729 with 232 unchanged as 360.8 million shares traded worth $5.9 billion.
