The stock market's summer slump has taken the benchmark Canadian index to a low point for 2010.
The S&P/TSX composite index fell 103.56 points to 11,092.50 on Monday. The 0.92-per-cent drop was the latest setback in a decline that saw the index fall about 4 per cent last week.
The index is now down 9.97 per cent from its 12-month high of 12,321.76. A 10-per-cent decline is a rough guideline for a stock market correction, a threshold the key U.S. stock market indexes have already surpassed.
Andrew Pyle, associate portfolio manager at Bank of Nova Scotia, noted the latest decline came on low levels of trading caused by the fact that U.S. markets were closed for the July 4 holiday.
"Personally, I wouldn't read too much into what happened today," Mr. Pyle said. "Clearly, the markets have become more negative in the past two weeks."
The big worry on the markets is that economic growth is slowing. If that's the case, then corporate profits would likewise weaken and trigger worse declines for stocks.
Mr. Pyle said economic growth in recent quarters has been respectable, but not bad on the whole. However, investors have been distracted by economic problems in Europe. The net result has been a broad-based decline in stocks and a rally in bonds. In fact, bond yields have fallen enough for the Bank of Montreal to have announced Monday that it is cutting five-year mortgage rates by 0.1 of a percentage point to 5.79 per cent.
For investors, the recent stock market weakness has recalled the big declines of 2008.
"It's not that we're down about 10 per cent on the TSX," Mr. Pyle said. "It's that we're getting into this volatility again - the up and down gyrations. These gyrations cause as much angst as the declines."
European markets posted modest losses of about a quarter to a third of a per cent on Monday, while stocks in Japan rose .7 per cent. The S&P/TSX composite index was weak across the board, with banks, metals, and energy stocks all posting declines.
Telecommunications, a stalwart this year, was the weakest sector on the Toronto market. BCE fell 56 cents or 1.81 per cent, and Rogers dipped 54 cents or 1.55 per cent.
Oil prices fell 39 cents to $71.75 a barrel in late trading, while gold was nearly unchanged, providing little lift to the heavily weighted gold and energy sectors on the TSX.
One of the biggest declines in Toronto was the junior metal company Taseko Mines, which plummeted 85 cents or 20.4 per cent after an adverse ruling from a federal environmental panel on its proposal to use a British Columbia lake as a waste rock site for a new gold-copper mine it is proposing to build.Report Typo/Error