Stocks retreated slightly on Thursday, failing to build on Wednesday’s spectacular rally as investors weigh the latest remarks from policy-makers in Europe.
The Dow Jones industrial average closed at 12,020.03, down 25.65 points or 0.2 per cent. The broader S&P 500 closed at 1244.59, down 2.37 points or 0.2 per cent. In Canada, the S&P/TSX composite index closed at 12,113.29, down 90.82 points or 0.7 per cent.
The setbacks come as the president of the European Central Bank and the president of France made remarks about the debt crisis that has ensnared the region for some time, weighing on stock markets. The ECB said that it would be willing to intervene in financial markets – something investors and economists have been hoping for for some time – but that new fiscal rules for the euro-zone must come first.
Germany and France have proposed a tighter fiscal union among the euro zone’s members, which will be discussed among members in an upcoming meeting. On Thursday, Nicolas Sarkozy said that France wants to work toward greater fiscal union, but his remarks were seen as falling shy of German demands, raising uncertainty that such a union will come together in time to help deal with the debt crisis.
The biggest winners during Wednesday’s rally turned into Thursday’s biggest laggards, with financials and commodity producers dragging indexes down. While Bank of America Corp. rose 1.7 per cent, JPMorgan Chase & Co. fell 1.7 per cent and Chevron Corp. fell 1 per cent.
Among Canadian stocks, Toronto-Dominion Bank fell 2.2 per cent and Canadian Imperial Bank of Commerce fell 1.3 per cent after the two kicked off the quarterly reporting season for Canada’s Big Banks, with earnings that topped expectations but fell shy on upbeat details.
Gildan Activewear Inc. plunged 32.5 per cent after the clothing maker delivered a bleak outlook with its quarterly results. As well, Lululemon Athletica Inc. fell 5.7 per cent after its third quarter sales missed analysts’ expectations.