The steady decline of Canadian stocks over the past several weeks crossed a significant threshold on Thursday when the benchmark index lurched into a full-on correction.
The S&P/TSX composite index fell in afternoon trading to a low of 12,834.64, marking its lowest level since November and bringing the total damage since early April to 1,435 points - or nearly 10.1 per cent.
Stock market corrections are regarded as more serious and potentially more significant than transient dips, and are broadly defined as declines of 10 per cent or more.
This marks the first correction for the Canadian index since stocks began to recover in March, 2009. During last year's concerns over the European debt crisis, the index fell 9.7 per cent before recovering.
U.S. indexes have been holding up better than the TSX during the recent slide, with the S&P 500 down just 7.1 per cent from its recent peak.
The Canadian index has been hobbled by its heavy exposure to commodity producers, which have been hit hard as raw material prices have tumbled due to growing fears about the health of the global economy. U.S. economic news has been disappointing, the Greek debt crisis threatens to destabilize the financial system and some observers are growing concerned that rising inflation in China will drive its economy into a so-called hard landing.
"The consensus belief, and hope, is that the authorities will be able to cool things off and get inflation under control without upsetting the economy too much. Unfortunately, 'soft' economic landings are a rarity," said Murray Leith, director of investment research at Odlum Brown, in a note.
Crude oil prices have fallen more than 17 per cent from their recent highs, while nickel has plunged about 25 per cent and copper has fallen nearly 11 per cent - throttling Canadian energy and materials stocks.
Meanwhile, bank stocks have also suffered after releasing generally disappointing earnings last month. Financials have since fallen more than 6 per cent.
The slide in the Canadian market comes as investors are showing signs of rising anxiety. The CBOE volatility index , widely seen as a "fear gauge," has risen to its highest level since the earthquake and tsunami devastated Japan in mid-March.
U.S. government bonds are proving to be a popular place of refuge. The yield on the 10-year Treasury bond fell on Thursday to a six-month low of about 2.92 per cent. (Bond yields move inversely to bond prices.)
The U.S. dollar is also a popular destination as investors retreat from what are perceived to be riskier currencies. The Canadian dollar, which is closely linked to commodity prices, fell below $1.02 (U.S.) - its lowest level since March.