S&P 500 in correction territory
Losses were deepening as investors grappled with discouraging economic data from around the globe and increasing concerns about a global recession
Article content
Losses were deepening on the Toronto stock market as investors grappled with discouraging economic data from around the globe and increasing concerns about a global recession.
The S&P/TSX composite index fell 88.67 points to 11,272.53 after briefly starting the day higher.
On Wall Street, the Dow Jones industrial average dropped 34 points to 12,085. The Nasdaq composite index was down four points to 2,743 and the S&P 500 index lost five points to 1,273.
A U.S. Commerce Department report said companies placed fewer orders to U.S. factories for the second straight month with orders for factory goods falling 0.6 per cent in April from March.
The weakness followed a dismal session in Asia where Japan’s Nikkei 224 index fell 1.7 per cent to its lowest finish since Nov. 28.
The Canadian dollar slipped 0.21 of a cent to 96.00 cents US, falling even further after finishing last week at a 5-1/2 month low.
U.S. stocks retreated, sending the Standard & Poor’s 500 Index down 10 percent from this year’s peak in April, as orders to U.S. factories unexpectedly fell and data pointed to a further Chinese slowdown.
Caterpillar Inc. and JPMorgan Chase & Co. lost at least 1.9 percent to pace declines among the biggest companies. The Dow Jones Transportation Average slid 1.2 percent. Facebook Inc. slumped 1.6 percent after last week’s 13 percent plunge. Chesapeake Energy Corp., the U.S. energy explorer battered by collapsing natural-gas prices and growing investor mistrust, rallied 2.3 percent as it will replace almost half its board under pressure from billionaire investor Carl Icahn.
The S&P 500 fell 0.3 percent to 1,274.43 at 10:36 a.m. New York time. The Dow Jones Industrial Average lost 24.68 points, 0.2 percent, to 12,093.89. Trading in S&P 500 companies was 2.9 percent below the 30-day average at this time of day.
“The data has been more pessimistic than optimistic,” said Tim Holland, portfolio manager at TAMRO Capital Partners, which oversees $1.75 billion. He spoke in a telephone interview from Alexandria, Virginia. “That obviously adds up to concern about Europe. The market is taking a very cautious tone.”
Equities fell as data showed that factory orders dropped 0.6 percent in April after a revised 2.1 percent decrease in March. Economists projected a 0.2 percent gain. China’s non- manufacturing industries expanded at the slowest pace in more than a year. Chancellor Angela Merkel’s spokesman said that Spain knows where to look for aid if it’s needed, giving no ground to Prime Minister Mariano Rajoy’s pleas that Germany consider new ideas to resolve the debt crisis.
The S&P 500 slumped from an almost four-year high on April 2 amid concern about a global economic slowdown and a worsening of Europe’s debt crisis. The decline trimmed this year’s gain to 1.4 percent. The Dow erased its 2012 advance on June 1 as American employers added the fewest workers in a year and reports signaled global manufacturing was slowing.
Financial, industrial and commodity shares had the biggest losses among 10 groups in the S&P 500. The Morgan Stanley Cyclical Index of companies most-dependent on economic growth retreated 1.3 percent. A measure of homebuilders in S&P indexes declined 2.5 percent. Caterpillar, the world’s largest maker of construction and mining equipment, dropped 2 percent to $83.81. JPMorgan slid 1.9 percent to $31.33.
Facebook slumped 1.6 percent to $27.27. The world’s biggest social network fell to a record intraday low after Sanford C. Bernstein & Co. initiated coverage with an underperform rating and a $25 target price.
“It is difficult to argue for owning the stock today,” said Carlos Kirjner, an analyst at Bernstein in New York, in a research report initiating coverage today.
Salesforce.com Inc. sank 2.2 percent to $128.16. It agreed to buy Buddy Media Inc. for about $745 million, its biggest purchase ever, adding marketing software to promote products on social sites including Facebook and Twitter Inc.
Yum! Brands Inc., which got about 44 percent of revenue last year from stores in China, dropped 2.1 percent to $63.37. The shares were downgraded at Raymond James Financial Inc.
Chesapeake Energy rallied 2.3 percent to $15.94. Four of the company’s eight non-executive directors will be replaced with nominees of the largest shareholders, Southeastern Asset Management Inc. and Icahn. Icahn triggered the overhaul by acquiring a 7.6 percent stake last month to rein in what he saw as Chairman and Chief Executive Officer Aubrey McClendon’s risk- taking and overspending that led to a $22 billion cash crunch and eroded the share price.
With files from Bloomberg
Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.