North American markets move back into the red
North American markets found themselves in red again in the face of growing economic uncertainty. Dow fell 338 points to close 8,497 while S&P 500 and NASDAQ also declined 38 points (4.1 percent) and 80 points (5 percent) to close at 873 and 1,517 respectively. Toronto also performed poorly with TSX dropping 297 points to settle at 9,056. TSX venture index also fell another 12 points to close at 802. The Canadian dollar continued to weaken against the US dollar and was down 0.94 of a cent to close at 81.60 cents. It has been a grim week as the Dow lost 4.99 percent, the S&P 6.20 percent and the NASDAQ 7.92 percent.
Mood was sombre in the US investors as the Federal Reserve Chairman Ben Bernanke said that the markets remain under "severe strain". The gloom was compounded by a record 2.8 percent decline in October retail sales as per a Commerce Department report. Clearly consumers are cash strapped and are reluctant to open their wallets. Not surprisingly, all major retailers were weak in New York in fear of or following the confirmation of poor earnings. JCPenney (NYSE: JCP) lost $2.01, or 10.4 percent, to $17.27. Kohl’s Corp (NYSE: KSS) fell 4.8 percent to $29.09 and Nordstrom (NYSE: JWN) fell 9.4 percent to $11.74. Abercrombie & Fitch (NYSE: ANF) also declined a staggering 20.7 percent, to a 52-week low of $17.79.
Weak retail sales also affected semiconductor companies dragging S&P500. Intel Corp., (NASDAQ: INTC) fell sharply 7.7 percent to $13.32, a six-year low. Advanced Micro Devices (NYSE: AMD) and Texas Instruments (NYSE: TXN) also tumbled 10 percent and 7 percent to close at $2.43 and $16.11 respectively.
Energy
Recession fears continued to weaken oil and fell a further $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange. Exxon Mobil Corp. (NYSE: XOM) fell $1.73 to close at $73.68 while Chevron Corp. (NYSE: CVX) also fell $3.03 to reach $72.68. ConocoPhillips (NYSE: COP) and Marathon Oil (NYSE: MRO) fell $1.79 and $1.21 to close at $47.39 and $26.69 respectively.
Canadian oil stocks also fell dragging the TSX. EnCana Corp. (TSX: ECA) fell 5.78 percent to $54.75 while Suncor Energy Inc. (TSX: SU) fell $0.85 or 3.51 percent to $23.34. Petro-Canada (TSX: PCA) and Canadian Natural Resources (TSX: CNQ) also fell $0.22 and $2.34 to close $25.78 and $48.00 respectively. The biggest drop was the North Sea success story Oilexco (TSX: OIL) with a 18.4 percent drop to $3.32. This is a 52-week low for Oilexco.
Metals
Despite a $37.50 increase in the gold bullion to US$742.50 an ounce on the New York Mercantile Exchange, the TSX gold sector fell 6.8 percent. Goldcorp Inc. (TSX: G) fell $1.78 to $26.21 while Barrick Gold Corp. (TSX: ABX) shed $1.35 or 4.7 percent to reach $27.20. Kinross Gold (TSX: K) fell $1.90 or a whopping 11.2 percent to $15.00. Newmont Mining (NYSE: NEM) fell sharply $1.95 or 7.4 per cent to close at $24.23. AngloGold Ashanti (NYSE: AU) and Goldfields (NYSE: GFI) also weakened 4.6 percent and 4.8 percent respectively.
Agony continued at Teck Cominco Ltd. (NYSE: TCK) and fell another 9.8 percent to close $5.25. Investors remain concerned about the company’s ability to service its debt raised to finance the acquisition of Fording Canadian Coal Trust. Teck Cominco raised $9.5 billion for the acquisition.
Junior explorers continued to decline as their ability to finance exploration programmes fast becoming doubtful. However some junior miners are trading below their cash value. Junior explorers such as Kootenay Gold (TSX.V: KTN), Volta Resources (TSX.V: VTR) and Anvil Mining (TSX: AVM) are some examples.
Financials
Financials continued to weaken in the US in the face of the economic slow down as well as credit worries. Bank of America (NYSE: BAC), Wachovia Corp (NYSE: WB) and JPMorgan Chase (NYSE: JPM) fell 3.98 percent, 2.66 percent and 7.3 percent respectively. Meanwhile, Citigroup (NYSE: C) inched up 7 cents to close $9.52.
Banks performed poorly in Canada as well. Bank of Montreal (TSX: BMO) dropped $1.59 to $41.45, TD Bank (TSX: TD) $1.01 to $53.57 and CIBC (TSX: CM) $1.74 to $52.74. Scotiabank (TSX: BNS) also fell $2.00 to $37.45
Elsewhere in Europe many countries are already officially in recession and it appears to be a matter of time that the US authorities may admit to a similar plight.
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