TSX, BlackBerry decline in Tandem
• The Toronto Stock Exchange fell sharply Friday amid news that smartphone maker BlackBerry Ltd. is cutting 4,500 jobs and will post a substantial loss next week when it reports its latest quarterly earnings.
The S&P/TSX composite index dropped 120.31 points to 12,806.47, while the Canadian dollar lost US35¢ to USS97.10¢. Shares in Waterloo, Ont.,-based BlackBerry closed down 16.08%, or $1.74, at $9.08 on the Toronto Stock Exchange.
BlackBerry says it expects to post a loss of between US$950-million and US $ 995million when it reports its second-quarter earnings next Friday.
Most of that will come from a massive writedown of up to $960-million it will take from poor sales of its new smartphone devices that went on the market earlier this year. It will also book a $72-million restructuring charge related to changes in its operations, which include previous layoffs.
BlackBerry also said it is reducing the number of devices in its portfolio from six devices to four. Half of the lineup will be marketed to higher-end consumers, while the other two will be for entry-level customers, it said.
On Wall Street, markets were also lower with the Dow Jones industrial average down 185.46 points at 15,451.09, Nasdaq off 14.66 points at 3,774.73 and the S&P 500 down 12.43 points to 1,709.91.
The BlackBerry news came on the same day that Apple Inc. began worldwide sales of its two newest smartphone models — the iPhone 5C and the pricier iPhone 5S. Shares in Apple fell US$4.89, or 1%, to close at US$467.41 on Nasdaq.
Meanwhile, Allan Small, a senior investment advisor with DWM Securities, said the markets have lost their way because anticipation on Fed tapering is over for now, and the Syrian crisis is on the back burner as a result of diplomatic efforts to defuse tension over its chemical weapons stockpiles.
“The market now is sitting around saying, ‘ OK, so now what? What do we have to focus on?’ ” said Small. “The market is kind of pausing. It doesn’t really know which way to go.”
Many traders had expected the U.S. Federal Reserve to start pulling back on its US$85-billion a month asset-purchase program, which had been put in place following the 2008 financial crisis to keep long-term rates low. But instead, the U.S. central bank said it would continue to buy the mortgage bonds and Treasurys because of continuing worries about the pace of the economic recovery.
The Fed will meet next in October and again in December. A decision on tapering the so-called quantitative easing program could be made on either occasion.
“Either way, the taper is coming. It’s going to happen at some point. Anyone who tries to figure out when the next taper is, that’s a fool’s game,” said Mr. Small.
Meanwhile, trading volume on the TSX ballooned to 650 million shares. On average, the TSX sees a range of 280 million to 330 million shares each day.
The gold sector was the leading decliner, as it fell 5.45%. The metals and mining sector was down 2.63%, as December copper dipped US3¢ to US$3.32 pound, and the energy sector pulled back 0.27%.