Stocks suffered their worst declines of the year on Monday, after disappointing economic growth in China caused at commodities selloff and an explosion in Boston raised concerns about terrorism.
The S&P 500 closed at 1552.36, down 36.49 points or 2.3 per cent – just two trading days after hitting a record high. The blue-chip Dow Jones industrial average closed at 14,599.20, down 265.86 points or 1.8 per cent. In Canada, the S&P/TSX composite index closed at 12,004.88, down 332.71 points or 2.7 per cent.
Gold received most of the attention throughout the day after its bear-market decline worsened: It slumped to $1,361.10 (U.S.) an ounce, down $140.30. From its high in 2011, gold has now fallen more than 28 per cent, a dramatic reversal that looks like a freefall over the past two trading days, with gold shedding 13 per cent.
The decline has exerted enormous pressure on gold producers, which form a big part of the commodities-heavy TSX, as the price of gold quickly approaches their production costs. Barrick Gold Corp. fell 11.8 per cent and Goldcorp Inc. fell 5.6 per cent.
Other commodities also suffered. Crude oil fell to $88.33 a barrel, down $2.96, which hit energy producers. Suncor Energy Inc. and Canadian Natural Resources Ltd. fell 4.6 per cent each.
The moves followed a report showing that China's economic growth in the first quarter slowed to 7.7 per cent year-over-year, missing expectations for 8 per cent growth amid concerns that its demand for commodities is declining. In the fourth quarter, China's gross domestic product had expanded by 7.9 per cent.
The CBOE Volatility index, or a so-called fear gauge, surged 40 per cent – with much of the rise following news of explosions in Boston, with bombs placed near the end of the finish line of the Boston Marathon. The VIX had been settling near multi-year lows until the recent bout of volatility.
Within the S&P 500, the declines were broad, affecting all 10 subindexes. Commodity producers were hit especially hard: Energy and materials fell 3.9 per cent each. Industrials fell 3 per cent.
As well, financials fell 2.2 per cent, sliding after a fairly quiet start to the day after Citigroup Inc. reported a 30 per cent rise in its first-quarter earnings. Citigroup surrendered most of an early gain, ending the day up just 0.2 per cent. Bank of America Corp. fell 1.6 per cent.
David Berman