TORONTO, DOW JONES SHED OVER 200 POINTS
TORONTO • North American markets delivered a “dose of reality” to investors Thursday, with the S&P/TSX composite index and the Dow Jones industrial average both plunging well over 200 points.
The Toronto market lost 226.97 points to 14,893.57, led by declines in energy and financial stocks.
The big drop is the fifth straight decline for the Canadian market and takes the TSX below 15,000 for the first time since late June. However, the S&P/TSX composite is still up nearly 9% this year.
“Investors in Canada, over the near term, have become complacent because the Canadian market has outperformed,” said Brian Belski, chief investment strategist for BMO Capital Markets.
“The issue when stocks go up is that you’re believing it more, and now all of a sudden Canadian stocks are receiving a dose of reality.”
The Canadian dollar fell US0.41¢ to US90.03¢, pressured by lacklustre commodity prices. The November crude oil contract dipped US27¢ to US$92.53 a barrel, while December gold bullion added US$2.60 to US$1,221.20 an ounce and December copper fell US2¢ to US$3.03 a pound.
The sell-off was even worse on Wall Street, with indexes ending the day with the steepest drop in two months. The Dow fell 264.26 points to 16,945.80, while Nasdaq plunged 88.47 points to 4,466.75 and the S&P 500 index lost 32.31 points to 1,965.99.
Mr. Belski said some of the downward pressure could be attributed to profit-taking, but mostly, the markets are just pulling back from the recent highs.
“We really feel that the momentum of trade, especially in the energy and materials space, has really skewed prices to the upside so far this year,” he said. “Now the resulting momentum shift is turning the other way.”
Financial stocks were among the biggest decliners on the Toronto exchange, down 2.18%. Of the country’s five biggest banks, Canadian Imperial Bank of Commerce suffered the biggest loss; its shares took back $2.43, or 2.3%, to $101.53.
The moves lower came amid signs the U.S. economic recovery remains precarious.
The U.S. Labor Department said weekly unemployment benefit applications rose 12,000 to a seasonally adjusted 293,000, while business orders for long-lasting manufactured goods fell by a record 18.2% in August, dragged lower by a plunge in demand for commercial aircraft.
Shares in Apple Inc. sank nearly 4%, or US$3.88 to US$97.87, a day after the tech company pulled the latest software update for its iPhone software after customers complained about dropped calls. The stock of rival Blackberry Ltd. fell 73¢, or 6.3%, to $10.88. The Waterloo, Ont., company unveiled its latest smartphone, the Passport, on Wednesday and is scheduled to release earnings on Friday.
Meanwhile, shares in Valeant Pharmaceuticals International Inc. were up $4.37, or 3.2%, at $141.66 in Toronto. The company said Thursday Jeffrey Ubben, founder and chief executive of ValueAct Capital, would join the company’s board on Oct. 1.