North American stocks fell sharply at the start of trading on Friday, even as U.S. President Barack Obama outlined an ambitious plan to spur economic growth.
The Dow Jones industrial average fell 179 points or 1.6 per cent, to 11,117. The broader S&P 500 fell 20 points or 1.7 per cent, to 1166. In Canada, the S&P/TSX composite index fell 103 points or 0.8 per cent, to 12,581.
The declines follow President Obama’s speech to Congress on Thursday evening, in which he called for the need for tax cuts and increased spending on infrastructure projects – a stimulus plan valued at $447-billion (U.S.), well above earlier estimates.
Investors could be concerned that the plan will not sit well with Republicans, or that the need for such dramatic stimulus efforts underline the weak condition of the U.S. economy. The backdrop wasn’t very upbeat either: Bank of America Corp. is considering eliminating 40,000 positions, a board member of the European Central Bank has resigned over an apparent conflict over the central bank’s bond-buying policies and U.S. authorities are warning of a potential terror threat from al Qaeda militants marking the tenth anniversary of the Sept. 11 attacks.
Add it up, and who wants to own stocks over the weekend? The declines were broad, affecting all 30 members within the Dow with little distinction made between economically sensitive stocks and more defensive names. Bank of America fell 1.4 per cent and JPMorgan Chase & Co. fell 1.9 per cent. McDonald’s Corp. fell 3.7 per cent, Chevron Corp. fell 2.3 pre cent and Coca-Cola Co. fell 2.1 per cent.
In Canada, Research In Motion Ltd. fell 3.6 per cent and Royal Bank of Canada fell 1.1 per cent. Commodity producers were also weak. Suncor Energy Inc. fell 1.4 per cent after the price of crude oil retreated to $88.18 a barrel, down 87 cents. Gold slid to $1,837 an ounce, down $21 – although Barrick Gold Corp. was down only slightly.