You know things are bad in the stock market when crude oil rises to a record high above $133 (U.S.) a barrel and even energy stocks get creamed.
But that's what happened on Wednesday after investors caught a glimpse of the minutes from the U.S. Federal Reserve's last monetary policy meeting, which suggested no more rate cuts. The minutes also outlined the main reason why: inflation is a growing concern even as projections for U.S. economic growth looks feeble.
Soon after the minutes were released, at 2 p.m. (ET), the already-unsteady North American stock market lost its footing altogether in a sell-off that left few sectors unscathed.
The S&P/TSX composite index closed at 14,790.37, down 256.97 points or 1.7 per cent, its worst decline in more than two months. To make matters worse, the benchmark index had hit a record high of 15,128 earlier in day, meaning that it fell 340 points in the space of four hours.
Most commodity producers were no help, a switch from recent trading sessions where these stocks provided the biggest support. The energy sector fell 1.5 per cent, led by EnCana Corp. and Suncor Energy Inc. (down 2.4 per cent and 1.9 per cent, respectively) - even as the price of oil leapt nearly $5 to a high of $133.82 a barrel. Meanwhile, Potash Corp. of Saskatchewan Inc. fell 4.8 per cent and Research In Motion Ltd. fell 4.4 per cent. Financial stocks fell 1.4 per cent.
Gold producers fared relatively well after gold rose more than $12 to $931.68 an ounce, but even they essentially treaded water: Barrick Gold Corp. rose just 0.5 per cent.
The Dow Jones industrial average closed at 12,601.19, down 227.49 points or 1.8 per cent. All 30 stocks in the index fell - yes, even Exxon Mobil Corp. and Chevron Corp., the energy giants - in a clear indication of investor sentiment: fear. Citigroup Inc. fell 4.8 per cent, Boeing Co. fell 4.6 per cent, General Electric fell 2.3 per cent and Microsoft Corp. fell 1.8 per cent.
The broader S&P 500 closed at 1390.71, down 22.69 points or 1.6 per cent. The decline was also widespread, with about 96 per cent of the stocks falling. Moody's Corp. fell 15.9 per cent after a Financial Times article pointed out that the debt rating agency had accidentally given a triple-A rating to a group of securities that, in fact, were supposed to be rated four-notches lower - then ignored the error.
At least there was one bright spot in the market: Anheuser-Busch Cos. Inc. rose 4 per cent on speculation that the brewer could merge with InBev SA - or perhaps investors bet that following Wednesday's stock market volatility, people will need to relax with a couple of cold ones.