TORONTO - A selloff in energy and financial stocks Wednesday pushed the Toronto stock market down a steep, triple-digit slide for a second day in a row.
Toronto's S&P/TSX composite index tumbled 202.75 points to 8,175.95 after the financial sector led the way to a 299-point loss on Tuesday.
New York markets were little changed despite the announcement of a plan from U.S. President Barack Obama to deal with the home foreclosure crisis.
New York's Dow Jones industrial average was ahead 3.03 points to 7,555.63, on top of a 298-point slide, as the index earlier retested recent lows hit in late November.
The Nasdaq composite index was down 2.69 points to 1,467.97 and the S&P 500 ticked 0.75 of a point lower to 788.42.
The TSX Venture Exchange moved down 3.34 points to 915.82 while the Canadian dollar rose 0.35 of a cent to 79.48 cents US.
A day after signing a massive US$787-billion stimulus plan into law, Obama announced plans to tackle the foreclosure crisis with a US$75-billion program.
The initiative is designed to help up to five million borrowers refinance, and provides incentive payments to mortgage lenders in an effort to help up to four million borrowers on the verge of foreclosure.
"This gets back to the fundamental issue -- until they deal with the problem with the foreclosures in the mortgage sector, you're not really going to have a lasting fix to the problem," said Norman Raschkowan, chief investment officer at Mackenzie Financial Corp.
"If people are concerned they may lose their home, they are not going to be anxious to be spending (and) if they're not spending, the whole economy sort of slows down."
The announcement of mortgage relief comes just after data showed construction of new homes in the U.S. plunged to a record low in January as all parts of the country showed big declines in building activity.
The U.S. Commerce Department says construction of new homes and apartments dropped 16.8 per cent last month to a seasonally adjusted annual rate of 466,000 units, well below the 530,000 units economists expected, and was the slowest pace on records dating back half a century.
General Motors Corp. and Chrysler have filed restructuring plans with the U.S. government that call for US$39 billion of aid. The two automakers have already received US$17.4 billion and said Tuesday they want another $22 billion.
The requests, made in government-required restructuring plans filed Tuesday, were accompanied by plans for thousands more job cuts, slashing of models and brands, union concessions and the prospect of even further expense cuts.
GM shares declined 12 cents to US$2.06 .
The Toronto financial sector was off 3.6 per cent after falling six per cent Tuesday as investors worry about the global financial system. In recent days, investor fears have been focused on the ability of banks in Eastern Europe to repay or roll over US$400 billion this year. The banks have borrowed US$1.7 trillion, much on short-term maturities.
"There were a lot of foreign financial institutions that went into Eastern Europe and lent money tied to the euro," observed Raschkowan.
"And then you have individual homeowners and consumers who took out loans in euros and are seeing the value of their own currency decline so suddenly those debts have expanded in size exponentially."
CIBC (TSX:CM) fell $1.91 to $41.69, Royal Bank (TSX:RY) lost $1.17 to $26.98 while insurer Manulife Financial (TSX:MFC) eased 59 cents to $15.08.
The TSX energy sector lost 3.55 per cent as oil prices deteriorated. The March crude contract on the New York Mercantile Exchange surrendered 31 cents to US$34.62 a barrel after falling US$2.58 on Tuesday as worsening economic conditions persuade traders that demand won't be rising anytime soon. EnCana Corp. (TSX:ECA) declined $1.90 to $49.40 and Petro-Canada (TSX:PCA) gave back $1.19 to $26.11.
Mining stocks also dragged with the base metals sector down three per cent. Teck Cominco Ltd. (TSX:TCK.B) lost 29 cents to $4.15 after it said Tuesday it is looking at all options, including a sale of some of its coal business, to reduce a suffocating debt load largely acquired when it paid US$14 billion for Fording Canadian Coal Trust last fall. Sherritt International (TSX:S) fell 28 cents to $2.62.
The April bullion contract in New York was up $10.70 to US$978.20 an ounce and the gold sector was ahead 0.8 per cent as Barrick Gold Corp. (TSX:ABX) advanced $1.21 to $48.40.
Rogers Communications Inc. (TSX:RCI.B) shares fell $2.65 or 7.7 per cent to $31.70 after it said a decrease in the value of its television division generated impairment charges that propelled the company to a fourth quarter loss of $138 million.
The result marks a sharp drop from a profit of $254 million recorded in the same quarter a year earlier.
Grocery chain operator Loblaw Companies Ltd. (TSX:L) posted fourth-quarter profit of $188 million, up from a year-earlier $40 million, as sales jumped 11 per cent, helped by one-time gains and an extra week in the accounting period.
Sales rose to $7.75 billion from $6.97 billion and its shares moved 40 cents lower to $33.
Research In Motion Ltd. (TSX:RIM) also helped keep the TSX negative, falling $3.72 to $52.82 . The stock has been falling since last week after it said its fourth-quarter profits will come in at the lower end of the company's previous guidance and a Credit Sussex analyst cut his rating on the Blackberry maker to under perform from neutral and slashed his earnings expectations for the February 2010 fiscal year.
Other market heavyweights taking the TSX lower included transport giant Bombardier Inc. (TSX:BBD.B), which lost 41 cents to $2.82.
Canfor Pulp Income Fund (TSX:CFX.UN) units tumbled 60 cents ot 23 per cent to $2 a day after the 50.2 per cent owned subsidiary of Canfor Corp. (TSX:CFP) said it is reducing distributions 75 per cent. Canfor Corp. stock fell 46 cents to $6.05.
