The sign outside Scotia Plaza in Toronto shows the closing numbers of the TSX on Tuesday, July 3, 2012.Matthew Sherwood/The Globe and Mail
The Toronto stock market was lower Thursday, adding to steep losses of the previous session as further weak employment data raised worries about slowing U.S. economic conditions.
The S&P/TSX composite index was well off early lows as mining stocks recovered some of the ground lost Wednesday, down 32.61 points at 12,389.51. A pair of soft economic reports and growing geopolitical risks sent the main index tumbling 260 points on Wednesday, erasing TSX gains for the year.
The Canadian dollar edged up 0.01 of a cent to 98.58 cents US.
U.S. indexes were mixed in an attempt to claw back a chunk of the losses Wednesday amid data showing the number of Americans seeking unemployment insurance rose to a four-month high last week.
The U.S. Labour Department reported that weekly applications increased 28,000 to a seasonally adjusted 385,000. It was the third straight weekly increase and the highest level since late November. The four-week average, a less volatile measure, rose to 354,250.
The Dow Jones industrial average gained 27.82 points to 14,578.17 after falling 112 points Wednesday, while the Nasdaq composite index edged 2.74 points lower to 3,215.86 and the S&P 500 index was up 4.74 points at 1,558.43.
Markets registered sharp losses Wednesday after a disappointing read on private-sector job creation from payroll firm ADP had traders reconsidering their expectations for the government's employment report.
The report, which comes out Friday, had been expected to show a total of 190,000 jobs were created in the U.S. last month.
Other data showed the U.S. service sector expanding in March at a slower than expected pace.
Traders were also rattled by threats from North Korea.
Early Thursday, North Korea warned that its military has been cleared to attack the U.S. though experts say it has not demonstrated it has missiles capable of long range or accuracy. Washington said it was working to defuse the situation.
While the declines over the last three sessions have left the TSX under water, New York has fared much better with the Dow industrials still ahead more than 10 per cent on what had been a steady stream of positive economic data and easing by the U.S. Federal Reserve.
Also, the market is suffering from the fact that the TSX is heavily-weighted towards resource stocks, which in turn are influenced by commodity prices that have been under selling pressure.
And it's not just the TSX that is suffering.
"Other markets haven't done well. It's really just the U.S. market and the Japanese, maybe," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.
"It's other markets that are taking it on the chin also and it seems like the U.S. is reigning supreme here and it's tough to see what's going to knock it off its perch."
Commodity prices also added to the sharp drop Wednesday.
The energy sector led decliners, down 1.23 per cent as the June crude contract on the New York Mercantile Exchange dropped $1.44 to US$93.01 a barrel after falling almost $3 on Wednesday. Cenovus Energy (TSX:CVE) gave back 46 cents to C$30.44 while Suncor Energy (TSX:SU) dropped 60 cents to $29.57.
Oil plunged after the U.S. Energy Department said crude oil supplies grew by 2.7 million barrels to 388.6 million barrels in the week ended March 29. The U.S. supply of oil is now 7.2 per cent above year-earlier levels and the highest since July 27, 1990.
Financials were also a major weight, down 0.84 per cent as Royal Bank (TSX:RY) shed 56 cents to $60.78 and Manulife Financial (TSX:MFC) gave back 17 cents to $14.41.
Miners were in positive territory after leading the TSX lower Wednesday.
The gold sector was up 0.9 per cent after sliding almost five per cent on Wednesday, as the June bullion contract on the Nymex lost $5.40 to US$1,548.10 an ounce. The gold sector has declined 24 per cent year-to-date as precious metal miners deal with prices that haven't kept pace with increasing operating costs.
"And the other thing that has caught up to the gold sector is, they've always traded at a high valuation and maybe people are re-evaulating that," Nakamoto said.
Goldcorp Inc. (TSX:G) gained 26 cents to C$31.90.
The base metals group was up 0.6 per cent while May copper shed early losses to gain two cents at US$3.35 a pound following a five-cent slide. First Quantum Minerals (TSX:FM) gained 72 cents to C$18.68.
Techs were also supportive as MacDonald, Dettwiler & Associates ran ahead 69 cents to $68.24.
Meanwhile, Japan announced that it is making a sweeping shift in its monetary policy that aims to raise inflation and get the world's third-largest economy out of a long slump.
The Bank of Japan announced a policy overhaul intended to double the money supply and achieve a two per cent inflation target, with a time horizon of about two years.
Tokyo's Nikkei 225 stock index ended 2.2 per cent higher.
European bourses were lower as London's FTSE 100 index dipped 1.15 per cent, Frankfurt's DAX lost 0.8 per cent and the Paris CAC 40 was down 0.9 per cent.
On the corporate front, Lululemon Athletica Inc. (TSX:LLL) shares gained 63 cents to $65.89 after it said Wednesday that its chief product officer is leaving the retailer, just weeks after it pulled its black Luon pants from store shelves because they were too sheer. Specific reasons for Sheree Waterson's departure were not disclosed.
Meanwhile, RBC Dominion Securities analyst Howard Tubin has cut his rating on Lululemon to "sector perform" from "outperform" and cut his target price on the stock to $70 from $80. He said Waterson was instrumental in the design process at the company for the last five years and was a strong creative leader.