Rough day for stocks

Feb. 2, 2009 (Baystreet.ca) --

04:38 pm EST Stocks ended mixed Monday, after taking in some news indicating the recession is deepening.

The S&P TSX Composite Index started the week in negative territory, sliding 88 points, to 8,606.90

Investors also fretted about the Obama administration's plans for a "bad bank," one of the options discussed over the weekend by Treasury officials and representatives of the financial industry.

A so-called "bad bank" would take the riskiest assets from commercial banks' books and put them into a government-controlled entity.

Administration officials said as recently as Saturday that they planned to release the plans this week, but have since pulled back.

The TSX financial sector was down 1.15% with TD Bank off 77 cents to $39.03 and CIBC down $1.28 to $45.35.

The energy sector slipped 0.8% as Canadian Natural Resources fell $1.17 to $42.72. Petro-Canada shares were up 29 cents to $26.88 on a report that the Ontario Teachers' Pension Plan is pressing for a restructuring that could lead to a showdown with the board.

The base-metals sector moved down 1.2% as Sherritt International dipped 10 cents to $2.57 while Teck Cominco Ltd. moved 11 cents lower to $4.63.

The industrial sector also pulled the TSX lower, as transportation giant Bombardier Inc. lost 35 cents or 9.2% to $3.45.

The telecom sector was off 1.15% after the CRTC gave wireless service providers one year to upgrade their emergency 911 operations to ensure police, fire or ambulance dispatchers can trace the location of a caller. BCE Inc. shares were down 34 cents to $24.77 while Telus Corp. was off 56 cents to $34.20.

The gold sector retraced, as Barrick Gold Corp. faded $1.42 to $44.72.

In corporate news, Aecon Group Inc. has agreed to acquire mechanical construction contractors Lockerbie & Hole Inc. for about $220 million. Lockerbie shareholders are to get $8 for each share, either in cash or Aecon stock. Aecon shares fell 30 cents to $9.95 while Lockerbie rose $1.75 or 28% to $7.90.

Maple Leaf Foods Inc. has confirmed a $27-million settlement of class-action lawsuits over last year's listeriosis outbreak which killed at least 20 people. The Toronto-based company says it will pay up to $125,000 for those with serious and long-lasting health effects. Its shares declined 19 cents to $10.71.

Canwest Global Communications Corp. shares backed off nine cents or 17% to 44 cents after it said the company is reviewing strategic alternatives and looking at divesting non-core assets.

Canwest also said Monday that its bankers have limited borrowing under the Canwest Media division's $300-million senior credit facility. The revisions will limit borrowing under the credit line to $20 million until Feb. 27, in addition to $92 million already drawn on the facility.

Shares in Nova Chemicals plunged to a new low as traders assessed heavy losses and looming financing deadlines in a deepening recession.

Stock in the biggest Canadian maker of plastics were down 74 cents or 32.6% to $1.53 after earlier falling to $1.48, down from five dollars a week ago and above $30 a year ago.

The Canadian dollar was in the red 1.13 cents to $80.40 cents U.S.

BAYSTREET All but one of the 13 TSX sub-groups listed downward, the leading laggard being gold, off 2.8%, followed by health-care stocks, off 2.5%, and materials, slipping 2.4%. Only information technology bucked the trend, that group gaining 0.3%.

The TSX Venture Exchange retreated 9.81 points to 872.82, while the NASDAQ Canada index was ahead 0.26 points to 549.07

ON WALLSTREET

The Dow Jones industrials index lost 64.11 points on the day to 7,936.75. The Standard & Poor's 500 index faded 0.45 points to 825.43. The NASDAQ composite index gained 18.01 points to 1,494.43.

As the economy deteriorates, investors are once again looking to Washington for answers, and they're worried that government gridlock will hold up a stimulus package for individuals and businesses.

President Obama said today that "very modest differences" over the stimulus plan should not delay its passage by lawmakers on Capitol Hill.

Economically speaking, the U.S. Commerce Department says personal consumption – the largest portion of total economic activity – dropped 1% in December. That was worse than the 0.9% decline economists had expected. And U.S. personal incomes sagged for a third straight month, down 0.2%.

Another report showed a slight improvement in manufacturing activity. The Institute for Supply Management's manufacturing index rose to 35.6 in January from a revised 32.9 in December.

Economists expected the index at 32.5. The number still reflects a recessionary environment. In earnings news, toymaker Mattel Inc. said its fourth-quarter profit skidded 46% worse than analysts' expectations. Its shares tumbled $2.26 or 16% to $11.92 U.S.

Health insurer Humana Inc. reported that its fourth-quarter profit dropped 28%, but its stock recovered from early lows to move up.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.71% from 2.85% Friday. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.

U.S. light crude oil for March delivery fell $1.60 to settle at $40.08 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery fell $21.20 to settle at $907.20 U.S. an ounce.