Take a steep drop in the price of crude oil, add in renewed concerns about the health of the U.S. economy, and you get a bad day for Canada's benchmark index.
The S&P/TSX composite index closed at 9121.32, down 350.77 points, or 3.7 per cent, driven largely by declining energy stocks that were sideswiped by a 12 per cent nosedive in the price of crude oil. It was the index's worst one-day performance since Dec. 1, when it plunged 9.3 per cent.
Oil fell to $42.63 (U.S.) a barrel, down $5.95, after the U.S. Energy Information Administration reported that crude oil inventories last week rose far higher than expected, suggesting that the demand for energy is evaporating with the deteriorating U.S. economy. Canadian Natural Resources Ltd. fell 8.3 per cent and EnCana Corp. fell 5 per cent, accounting for some of the largest drags on the index.
Gold producers were also weak, after the price of gold tumbled to $841.70 an ounce, down $24.50. Barrick Gold Corp. fell 6.2 per cent and Goldcorp Inc. fell 6.1 per cent.
However, the losses were actually widespread, with 92 per cent of the 220 stocks in the S&P/TSX composite ending the day in negative territory. The widespread dismay with stocks came soon after a private payrolls report earlier in the day suggested that the U.S. employment picture could be far worse than expected – and a widely anticipated economic recovery in the second half of this year could be delayed. Among financials, Bank of Montreal and Toronto-Dominion Bank each fell 2.2 per cent.
In U.S. markets, the day wasn't a whole lot better. The Dow Jones industrial average closed at 8769.70, down 245.40 points, or 2.7 per cent – with 28 of the 30 stocks in the index falling. The broader S&P 500 closed at 906.65, down 28.05 points, or 3 per cent.
Alcoa Inc. fell 10.2 per cent, one day after it announced plans to reduce its work force by about 13 per cent. Intel Corp. fell 6.1 per cent after it slashed its revenue forecast for the fourth quarter, estimating that sales will be 23 per cent lower than the same period last year.
