Mar. 2, 2009 (Baystreet.ca) --
12:35 pm EST
Equity markets on both sides of the border are still wondering what hit them, as Canadian investors take in foreboding economic figures, and their cousins stateside digest the misfortunes that befell AIG and Berkshire Hathaway.
The S&P/TSX Composite Index was still searching for a bottom by midday Monday, having lost 477 points during the morning session to register at 7,646.02, more than wiping out last week's 2.2% advance.
Statistics Canada reported the Canadian economy contracted at an annualized rate of 3.4% in the fourth quarter.
The contraction worsened toward the end of 2008, with gross domestic product declining 1% in December.
Financial stocks took some of the worst beatings; Scotiabank lost $1.70 to $27.01 and CIBC fell $3.06 to $40.09. Royal Bank of Canada shed $1.50 to $29.42, and insurer Manulife Financial fell $1.31 to $11.59.
The Toronto energy sector sagged as EnCana Corp. fell $3.67 to $46.53 and Suncor Inc. stepped back $2.34 to $24.12.
Other major stocks pulling the TSX lower included Research In Motion Ltd. down $2.28 to $48.56; Potash Corp, off $8.87 to $97.91; and Bombardier Inc, lower by 34 cents to $2.62.
Nortel Networks Corp., operating under court protection from creditors, reported a fourth-quarter net loss of $2.14 billion U.S. as revenue slumped 15% to $2.72 billion. Its shares were unchanged at 10.5 cents.
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%. Accordingly, the Canadian dollar shed 0.76 cents to 77.55 cents U.S.,
BAYSTREET
All 13 TSX sub-groups remained negative by noon, energy and metals and mining stocks down 9.1%, while financials were 6.9% to the bad.
The TSX Venture Exchange was down 14.93 points to 846.73, while the Nasdaq Canada index downsloped nearly 30 points to 380.58
ON WALLSTREET
The Dow Jones industrials index had lost 229.39 points by noon to trail Friday's close at 6,833.54. Friday, the index hit yet another 12-year low
The Standard & Poor's 500 index retreated 26.87 points, at 708.22, the NASDAQ composite index lost 39.23 points to 1,338.61
Investors were taken aback after AIG, once the world's largest insurer, reported it lost $61.7 billion U.S. in the fourth quarter.
Washington said it will give AIG another $30 billion U.S. in loans, in addition to $150 billion U.S. it has already given the ailing insurer. It's the fourth time the government has stepped in to help AIG since September.
Also weighing on investor sentiment is an assessment by billionaire Warren Buffett that the American economy "will be in shambles throughout 2009 - and, for that matter, probably well beyond - but that conclusion does not tell us whether the stock market will rise or fall."
Buffett's insurance and investment company, Berkshire Hathaway Inc., reported during the weekend that it had its worst year ever in 2008.
Investors also braced for dreadful employment news at the end of the week. Economists project the American economy shed at least 640,000 jobs during February.
Experts have said there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000 unless the U.S. housing market can stabilize.
Elsewhere in the financial sector, HSBC PLC, Europe's largest bank by market value, reported a 70% drop in 2008 net profit to $5.7 billion U.S. and said it would raise $17.7 billion U.S. in shares while cutting 6,100 jobs in America. In New York, HSBC Holdings fell $6.92 to $27.88 U.S.
Before the opening bell, the U.S. 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.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.91% from Friday's 3.01%. Treasury prices and yields move in opposite directions.
The April crude contract on the New York Mercantile Exchange fell $3.46 to $41.30 U.S. a barrel on expectations of widening and deepening economic weakness.
Gold prices slumped $3.70 to $938.80 U.S. an ounce.