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  (Fred Lum/The Globe and Mail)

 

(Fred Lum/The Globe and Mail)

At midday: TSX in steep dive amid earnings disappointments Add to ...

The Toronto stock market tumbled more than 200 points Thursday as a number of big Canadian corporations missed earnings forecasts.

The S&P/TSX composite index was down nearly 250 points, or 1.6 per cent, to 15,276 at 1230 p.m. (ET)

U.S. indexes were also sharply lower as the Dow Jones industrials tumbled about 226 points or 1.3 per cent, and the Nasdaq was down 2 per cent and the S&P 500 index down 1.6 per cent. The benchmark S&P 500 index, falling in its biggest one-day decline since April 10, moved solidly under its 50-day moving average, a level it has not closed below since April 15, though it has dipped under it since then. The moving average is viewed as a sign of short-term momentum, and selling accelerated after the level was breached.

All ten primary S&P 500 sectors were down on the day, with energy the biggest decliner with a drop of 1.8 percent. Almost 90 percent of stocks traded on the New York Stock Exchange fell, while 82 percent of Nasdaq-listed shares were lower. The CBOE Volatility index rose 20 percent to 15.98, its highest level since April, though well under its historical average of 20.

Analysts thought it was difficult to pin the negative showing on one particular item.

The U.S. Federal Reserve indicated Wednesday that it will keep short-term interest rates low “for a considerable time” after it ends its bond purchases, likely in October. The Fed is expected to start hiking rates mid-2015, but stronger than expected economic growth in the second quarter has investors concerned that the Fed could raise rates sooner.

Argentina moved into a debt default for the second time in 13 years as a midnight Wednesday deadline to reach a deal with holdout bondholders came and went.

And volume is thinner than usual with many market participants on holidays.

But the decline also comes at a time when markets have registered substantial gains.

“You get little thinner markets and it doesn`t take much to move things around,” said Wes Mills, chief investment officer Scotia Private Client Group.

“Clearly everyone has made good money and there is no evidence that people are taking money off the table yet. It`s probably just an overdue correction in a thin summer market with a combination of factors.”

Bombardier Inc. reported adjusted earnings were $192-million (U.S.), or 10 cents – a cent ahead of estimates but its shares lost three cents to $3.64.

Valeant Pharmaceuticals International Inc., which is making a hostile takeover bid for Botox maker Allergan, posted a quarterly net profit of $126-million (Canadian) or 37 cents a share. Adjusted income was $651-million, or $1.91 per share, missing estimates of $1.98 a share and its shares fell $9.57 or seven per cent to $127.85.

Barrick Gold Corp. delivered a $269-million (U.S.) quarterly net loss and $159-million of adjusted earnings in the second quarter, missing analyst estimates on both counts. The adjusted profit amounted to 14 cents per share, two cents below estimates. Barrick shares dipped 28 cents to $19.86.

Suncor Energy Inc. posted net income of $211-million (Canadian), or 14 cents per share, compared to $680-million, or 45 cents per share, a year earlier. Operating earnings, which strip out the effects of unusual items, came in at $1.14-billion or 77 cents a share, 20 cents below estimates and its shares were down $1.24 to $44.55.

First Quantum Minerals fell four per cent to $25.95 as copper sales increased. But earnings per share came in at 23 cents, three cents short of forecasts.

Going against the grain was corporate software company Open Text, up 15.1 per cent to $60.96 as its quarterly profit doubled while revenue improved by more than 40 per cent.

The TSX energy sector was down 2.26 per cent as September oil moved 66 cents lower to $99.62 (U.S.) a barrel.

The metals and mining sector fell 2.2 per cent with September copper off a penny at $3.23 a pound.

The gold sector fell 1.75 per cent while December gold faded $9.50 to $1,287.40 an ounce.

With files from Reuters

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