News

The losing streak on the Toronto stock market extended to a fourth session Thursday, with the main index losing almost 250 points as investors took profits on doubts about the strength of the U.S. economic recovery.

The S&P/TSX composite index TSX-I tumbled 248.21 points, or 2.25 per cent, to 10,805.33, led by mining stocks as a rising U.S. dollar sent commodity prices and the Canadian dollar sharply lower.

Investors were dismayed with data showing sales of new homes in the U.S. dropped unexpectedly last month, falling 3.6 per cent to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists had expected a rise of 2.6 per cent.

Investors also pulled back after Goldman Sachs Group Inc. reduced its expectation for U.S. economic output for the July-September period. Goldman Sachs now expects third-quarter gross domestic product rose at an annual rate of 2.7 per cent, weaker than its earlier forecast of 3 per cent.

The government's report on third-quarter GDP is due Thursday morning and other economists have been expecting the report to show annualized growth of at least 3 per cent.

The TSX has lost 6.3 per cent over the last four sessions. Analysts pointed out that a round of profit-taking wasn't surprising, considering the TSX had gained about 50 per cent since the lows of March with hardly a break.

But that gain was based on hopes for a strong economic rebound being in place by late this year and recent economic data, including a report Tuesday that showed an unexpected drop in U.S. consumer confidence, have shaken those hopes.

“I'm expecting that the recovery won't be as robust as everybody thinks it is,” said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.

“If I step back and ask what should I be expecting in the next six months to a year, I think you have to say to yourself, maybe this little puppy is not as robust as we thought it would be. We might trend down from the highs that we have had recently.”

The resurgent greenback sent the Canadian dollar CAD/USD-I down 1.08 cents (U.S.) to 92.72 cents after going as low as 92.52 cents US.

All TSX sectors were negative, with the energy group down 3.37 per cent as the December crude CL-FT contract on the New York Mercantile Exchange dropped $2.09 to $77.46 a barrel.

Mining stocks were also under pressure as the December copper HG-FT contract on the New York Mercantile Exchange backed off 6.85 cents to $2.93 a pound and the base metals sector lost 6.38 per cent.

The gold sector was down 4.03 per cent as December bullion GC-FT on the Nymex lost $4.90 to $1,030.50 an ounce.

Groups outside the commodity sectors were also down sharply.

The tech sector declined 3.55 per cent while the industrial sector lost 2.58 per cent .

The TSX Venture Exchange JX-I dropped 43.05 points to 1,263.41.

Economic data also depressed New York markets and the Dow Jones industrial average DJIA-I dropped 119.48 points to 9,762.69.

The Nasdaq composite index COMP-I gave back 56.48 points to 2,059.61 while the S&P 500 index SPX-I was down 20.78 points to 1,042.63.