Mar. 2, 2009 (Baystreet.ca) --
10:30 am EST
The Toronto stock market is down amid data showing a large drop in Canadian economic growth in the fourth quarter, while financials retreated following a record-breaking quarterly loss at insurer American International Group.
The S&P/TSX Composite Index provided a harbinger of things to come early Monday, unloading 192.09 points to open at 7,930.93, as investors digested less than palatable economic figures from Statistics Canada.
The Canadian economy contracted at an annualized rate of 3.4% in the fourth quarter, compared with a 6.2% decline in the U.S. economy during the same period, according to data released by Stats Canada Monday.
Economists were expecting quarterly GDP to plunge 3.6%. Real GDP declined 0.8% in the fourth quarter, weakening progressively each month.
This was the sharpest quarterly decline since 1991. Declines in exports, capital investment and personal expenditures all contributed to the economic contraction. Final domestic demand fell 1.2%. Government current and capital expenditure rose.
GDP growth for the year was positive at 0.5%, a sharp deceleration from 2.7% in 2007.
On the earnings front, traders will take in quarterly results from embattled Nortel Networks, Pengrowth Energy Trust, and Vermillion Energy Trust.
Looking ahead, on Tuesday the Bank of Canada will make its latest interest rate announcement. Economists expect the central bank to slash its key overnight rate to 0.5% from 1%.
The Canadian dollar was off 0.58 cents to 77.73 cents U.S.,
BAYSTREET
All 13 TSX sub-groups began the day negative, metals and mining was off 3.9%, energy stocks were down 3.4% and financials were 3.2% to the bad.
The TSX Venture Exchange was down 0.17 points to 861.46, while the Nasdaq Canada index fell 9.68 points to 400.88.
ON WALLSTREET
The Dow Jones industrials index began the day, week and month on the wrong foot, trailing Friday's close by 132.93 points at 6,930
The Standard & Poor's 500 index retreated 14.88 points, at 720.21, the NASDAQ composite index lost 18.61 points to 1,359.23
Financial stocks are back in the spotlight after AIG, once the world's largest insurer, said it lost $61.7 billion U.S. in the fourth quarter, the biggest quarterly loss in U.S. corporate history.
The company blamed "severe credit market deterioration," particularly in mortgaged-back securities, as well as charges from ongoing restructuring activities.
In addition, the insurer and the government announced a restructuring of the $150-billion U.S. bailout agreement. Key components included the government's decision to commit another $30 billion U.S. to the firm in exchange for cumulative preferred stock, and an exchange of an existing $40-billion U.S. preferred shares stake for shares that more closely resembles common stock.
Before the opening bell, the government released the personal income and spending data for January. Personal income rose 0.4%, beating expectations of a 0.2% decline, according to a consensus of economic opinion from Briefing.com.
Personal spending rose for the first time in seven months, up 0.6%, which was higher than the 0.4% increase expected by Briefing.com consensus.
Investor Warren Buffett's Berkshire Hathaway reported the worst results in the 44 years he has run the company, and only the second decline in net worth in that time. In his report to shareholders Saturday, Buffett said Berkshire's net worth fell in 2008 by $11.5 billion U.S.
The April crude contract on the New York Mercantile Exchange was down $3.24 to $41.52 U.S. a barrel.
Gold prices slid $4 U.S. to $938.50 U.S.