Updated: Thu Nov. 06 2008 17:09:48

The Canadian Press

TORONTO — North American stock markets were splashed with red once again on Thursday as caution over the economy showed up in corporate earnings and outlook estimates for next year.

The deepening concern was felt across all of the markets, but none moreso than on Wall Street where the Dow Jones industrial average crumbled almost five per cent on the day -- pushing it down nearly 10 per cent over the last two sessions.

Toronto's S&P/TSX composite index fell more than three per cent, or 331.79 points, to close at 9,555.41 on broad weakness highlighted by further declines in major commodities.

The Canadian dollar closed at its lowest level of the day, down 1.7 cents to 83.92 cents US. The loonie has dropped 2.95 cents since Tuesday.

The TSX energy sector was down 6.8 per cent. Crude oil receded seven per cent, or $4.53, to close at US$60.77 on the New York Mercantile Exchange.

TSX gold stocks dropped 6.6 per cent with the December bullion contract on the New York Mercantile Exchange tumbling $10.20 to end at US$732.20 after heading nearly $19 higher earlier in the session.

Iamgold Corp. reported a third-quarter profit of US$18.8 million or six cents per share, down from a year-earlier US$19.5 million or seven cents per share. Its shares lost 10 per cent, or 45 cents, to $3.89.

The TSX Venture Exchange lost 31.29 points to 920.13

On Wall Street, the Dow Jones industrial average slipped 443.48 points to 8,695.79. It was the first time the Dow had fallen below 9,000 points in more than a week.

The Nasdaq composite index dropped 72.94 points to 1,608.70 while the S&P 500 moved down 47.89 to 904.88.

The widespread decline comes amid weak U.S. retail sales and employment data, adding to anxiety about a deep American recession spreading worldwide.

The U.S. Labor Department said new claims for unemployment benefits dipped by 4,000 to a seasonally adjusted level of 481,000, but jobless claims above 400,000 are considered recessionary levels, and have run above that figure for 16 weeks.

Better-than-expected sales at Wal-Mart Stores Inc. provided one of the few bright spots, as the world's largest retailer benefited from a consumer focus on basics. But most other U.S. stores, particularly mall-based apparel merchandisers, reported steep sales drops.

A warning by Cisco Systems Inc. aggravated investor worries. The world's largest maker of computer networking equipment said late Wednesday that orders fell off sharply last month, indicating that the weak economy and tight credit markets are hurting many companies.

And News Corp., the global media empire run by Rupert Murdoch, reported a 30 per cent decline in quarterly profit.

Financials lost 0.38 per cent as Manulife Financial Corp. arranged a $3-billion loan line from the six biggest Canadian banks to bolster its capital, while reporting its third-quarter profit was cut by half to $510 million, eroded by sliding stock markets and a hit from credit losses. Manulife stock dipped 45 cents to $25.35.

Investment dealer Canaccord Capital Inc. suspended its dividend while reporting a summer-quarter loss of $5.4 million, down from year-ago earnings of $15.3 million. Revenue was down 30 per cent at $110.8 million. Canaccord shares fell 9.3 per cent, dropping 59 cents to $5.76.

GMP Capital Trust was up nine cents to $5.01 despite disclosing it is cutting distributions by more than half, eliminating 37 employees and trimming executive salaries by 10 per cent after a 43 per cent slide in third-quarter revenue to $74.8 million.

Earnings were stronger at two of Canada's biggest retailers, last month.

Canadian Tire Corp. third-quarter profit rose 6.3 per cent increase to $108.6 million as its retail sales grew 7.3 per cent. Its stock rose 68 cents to $45.98.

Shoppers Drug Mart Corp. says increased sales of prescriptions and other products pushed up its third-quarter revenues by 9.8 per cent to $2.8 billion. Net income rose to $162.5 million for the 16-week period ended Oct. 3, up from $141.7 million a year before. Company shares were down 22 cents to $47.45.

Canadian Natural Resources Ltd. said it earned $2.84 billion or $5.25 per share in the latest quarter -- quadruple the year-ago bottom line of $700 million or $1.30 per share, sending its shares down $1.30 to $49.84.

The Bank of England slashed its benchmark interest rate by 1.5 percentage points to three per cent. The size of the cut jolted financial markets which had expected at most a one-point reduction.

The European Central Bank quickly followed by cutting its policy rate by half a point, and the Swiss National Bank also cut its key rate by half a point.

While equity markets have generally responded favourably to central bank interest rate cuts this year, the latest market reaction suggests that sometimes there can be too much of a good thing, said Colin Cieszynski, a market analyst at CMC Markets Canada.

"This selloff suggests that the U.K.'s big rate cut may have had the opposite effect of what may have been intended," Cieszynski wrote in a note.

"Instead of increasing confidence that central banks are working to get the global economy going, this move may instead have raised fears that central banks may be panicking, that central bankers may know something that the street doesn't and that economic conditions may be even worse than has currently been discounted."

AbitibiBowater Inc. shares dropped 13 per cent, or 32 cents, to $2.09. The company reported a third-quarter net loss of US$302 million, $5.23 per share, on sales of $1.7 billion.

Canadian Satellite Radio Holdings Inc. shares dropped 25 per cent, or 35 cents, to $1.05 after the company reported its annual net loss narrowed and revenues rose as the Toronto company continued to grow its satellite radio business.

Biovail Corp. reported third-quarter net income of $48.4 million, down 27 per cent from $65.9 million a year earlier, as revenue declined to $181.1 million from $188.9 million. Shares were up a penny to $10.70.

Toyota Motor Corp., which had been riding high on the success of its Prius hybrid and Camry sedan, says it expects its earnings for this fiscal year will be less than a third of last year's profit and its lowest annual total in eight years.

Comments are now closed for this story

Jow
Nothing to worry about. The all caring, the infallible Messiah Borack Obama will walk across the Worlds Oceans to make everything right with the wave of his left hand.

Hang on to your hats

Nick in Gatineau
Is it me or are people so naive as to think that Obama would have his economic plan slated for vote in the congress the day after he got elected ?

Bush still has 2.5 months to screw things up even more. Obama can't do a thing until he's sworn in.

Dean
I wish I had a ton of money to invest right now. Plenty of deals out there. I can't understand why all of the panic. Everyone still needs a place to live, drive a car, buy food, do laundry etc. If everyone stops spending, there will indeed be a recession. I wonder why the econmists keep saying doom and gloom. How about talking about the good times we had and the ones to come? I know, they all want their few seconds of fame by saying the same thing.

Be fearful it makes others rich !!
F E A R = keyword here.


Shorters are depending people are motivated by FEAR. They get rich because of FEAR.

FEAR THIS and FEAR THAT = $$$$

The public is so easy to manipulate.

Scene
I agree with the above statement if you have some money to invest in, there are some great deals to be had. However I am not a trader or economist, so don't take advice from me or anyone on this board. Back to the story though, hopefully people don't think Obama is going to come into office and fix everything within a month. This is a global crisis and all the USA can do is lead the way. Be glad you live in Canada, and be glad to be at the top of the food chain for once folks. Believe it or not our country compared to others out there is the pedestal every nation is striving to emulate! Be most proud on Nov. 11 for our country most importantly, but also for the fallen around the world who fought for our freedom.

Tom working in the real world
Jow is right on. We have discussed company plans during this crisis. A general thought was to wait until both elections are done and see how markets respond then. The markets are responding to Borock the water walker now, not Bush.

The Bush haters have had their vision so clouded they will give Obama a free pass just like Nick has. He's just another politician, his economic plan is to circle the wagons and become more protectionist, so Nicks right on that one, just give em a little time...

The markets are telling us what they think of the President elect.

Paul
It's the Obama effect. People who know the economy know his plans will NOT be good for the US or world economy.

And no, they don't expect him to do it all on day one, but they want to get ready for the day it does happen, so there is profit taking, and soon there will be layoff too as business cut costs to hunker down for the hard road ahead.

Prof. Pye Chartt
Markets run chiefly on emotion, with knowledge and economic facts most often taking a back seat. Confidence and fear are the triggers.

While Obama does not yet occupy the Oval Office, his election to President isn't a global secret.

Therefore, any tongue-in-cheek comments that despite being held up as "World Saviour" by the religious faith of overenthusiastic political zombies, Obama hasn't (so far) ignited a wave of confidence upon which investors and markets can ride upward are rather valid.

Maybe when he finally takes his wizard wand out of its case the economic sun will shine brighter as a direct result.

Reece
I´ve said this before...China is in free fall and reports from M.I.T. have said as much 2 years ago even while people were being told that China was hot. China´s factories are shutting down by the thousands and millions of chinese are out of work with untold millions joining their ranks in desperate poverty. You can´t be a slave nation and not feel the pain. It´s also predicted that civil war will break out by 2013 in China, and predictably the CPP announced that they will become a democracy in 20 years...yeah right! Obviously a carrot to quell the uprising that is about to boil.

fitzz
Hang on to your hats?

Surely you jest! It will be much more like hang on to your wallet. A democrat just got elected as US president, get it? One who also has control of congress. A leftist at that.

That's D E M O C R A T as in tax and spend, often just for the sport of it!

Any government which just authorized close to a trillion for Wall Street welfare will have to raise some revenue someplace - and in relatively short order. Watch all of the rhetoric of an election campaign disappear in a puff of smoke.

Political wisdom is to "go ugly early". Er, make that right away. The Bamacrats will do the nasty early on. There will be four years to rebuild, recover, say "sorry" etc before a day or reckoning arrives anew.

Robin the Hood
sworn in or not Obama won't be able to do much... this has gone beyond the powers of any and all Govts to stop. The damage caused by right wing policies, a lack of fiscal controls and sensible regulations for the last decades is too great. At this point I think they need to fully nationalize the banks, get rid of their CEOs (who are only hoarding money) and start lending again. Then hope for the best. The Govts have few options and really never had much control since the crash began. Capitalism is forever changed.

Mutt from Windsor
With literally trillions of dollars worth of new spending promised by the Messiah Obama and an unbridled left wing Congress and Senate, business leaders are starting to bail. The Messiah will be under tremendous pressure to pay homage to the far left wing, decimating the Military and business, small and large alike. Soon there will be no rich business people left in the US , except corrupt politicians, and the middle class wage earners will be footing the bill. The good side will be that many of the businesses who do not go to China, will flee to Canada where a weaker Cdn dollar and a prudent Conservative financial policy still exist( no thanks to the Liberals). The Messiah is simply a re-incarnated Pierre Trudeau, a closet socialist who will destroy the military and non-Liberal business people. The Messiah will soon have his arm around Iranians and the North Koreans much like Trudeau did with Castro. Al-Qaida must be licking their chops. I am afraid for the future of my grandchildren and our cousins in the US.

Pat_from_Mississauga
Jow, and Tom are right. Obama will solve all of our problems...no wait...we don't have any problems, because George W. Bush and Steven Harper already solved them? Right? ... Wrong? What are you saying?!...the world economy melted down ON THEIR WATCH! I don't believe it! - the right wingers balance budgets...err...well, ok, scratch that one. They create jobs...err...ok, scratch that one too. They cut spending?...well, ok, under Bush and Harper, spending has skyrocketed, ok, scratch that one too. hmmmm....Paging Bill Clinton and Jean Chretien... You're need in ER right away, the economy is on life support!

Bob Ray
Dean,

You are right, everyone still needs a place to live, drive a car, buy food, do laundry etc., but if they don't have a job how will they pay for it? They won't be able to. That is what all of the panic is about.

It is a brave soul who thinks he knows what stock be going up (and is a bargain) and when we are near the bottom.

I and many others fear the elevator is going to continue to drop before the emergency brakes kick in, not to mention start going up again.

And there is more bad economic news on the horizon. If the automakers fold (see Globe & Mail today), 3M jobs will be lost in the USA. How many in Canada, we don't know.

Scared? You bet!

From Ontario
...the only true way for Mr. Obama to fix this is to bring the economy out of recession and as we seen with the former president, this cannot be done. It will take time for the markets to gain confidence, so when the markets are ready the economy will boom again. No world leader can do anything until confidence is restored. ...Harper has done nothing to help this economic crisis? Once again the issue comes from and is the result of the meltdown in the US. The only way for Harper top fix this issue is to take over th US and regulate it. How would the Americans feel about that? Besides Harper has done the best he can to aid the crisis in Canada. He has cut taxes which is basically the only option to stimulate growth. Cutting personal taxes will get consumers to spend the extra cash they have. And cutting corporate taxes will get companies in the long term lending again. All the other parties in Canada campaigned on increasing corporate taxes which would harm the economy even more. ...upset that the Harper government is posting a possible deficit for August. Well in that month alone the corporate tax income fell 40% because of the crisis. That alone will cause the government to go into deficit and no one could have predicted that or stop it. Besides it is better for the people to have that money to spend then it sitting it the government coffers doing nothing for the economy.

James
Flush!
And I don't mean how we are all feeling financially. The election of Obama was not going to make the fundelmental problem of the world's economy go away. We are bankrupt! The lenders want their money and they are sending Recession and Unemployment out to collect. We are about to kneecapped and have our noses broken because we can't pay our debts.
The only solution is for the loan sharks to be busted for all the bad loans they made and as for the loans; fugetaboutit!!
Flush!

L.A.
The truth is the US is insolvent. A debt ceiling of $11.3T, a deficit of $455B for 2008 (about the size of Canada's national debt), with total debt representing 72.5% of GDP,up from 65.5% last year. Annual interest payments to holders of national debt are over $400B,and this figure does not include unfunded obligations (social security, healthcare) that raise total debts to about $60T. The US government has to borrow to service its debt, that is like a person borrowing on another credit card to pay off debt and interest on another. President Bush can not be blamed for everything. Bill Clinton's administration passed two bills in Congress that helped create the financial mess. Barack Obama will have to deal with the same problems as the Bush administration, the economic and geopolitical problems will not disappear. Bush had a very rough Presidency and he lived up to his oath of office. The world will test the new President, let's hope he has backbone like Bush. We all should be very worried, none of us have lived through a great deflation. It is different this time.

Len Curle
Obama is in for a rough ride and I believe GWB got out at the right time and Obama will be the President to see the world go from a recession to another great depression globally, and he will be the fall guy.

Mike
So sorry to see Canaccord Capital Inc. in the red. After watching them short their clients stocks this looks good on them.

Kowai
Ok now lets see,

Obama is going to give tax breaks to 95% of the people (read poor) that leaves 5% (read rich)

So tell me people where is Obama getting the money to give to the 95% (read poor)???

Ummm…… from the 5% (read rich)???

And you’re all sitting there waiting to see the stock market climb because Obama won the election???

I don’t care if Obama is African American or the second coming of Christ!!! The 5% (read rich) are (NOT!!!) giving their money back to the 95% (read poor).

They (read 5%) are going to fill their pockets with their precious money and RUN!!!

(Read stock market crash, Read world depression)

Oboma can pull the world through this, but it’s going to take the help of 95% of the WORLDS!!! Population working together helping their fellow man!!!

NOT THE 5%!!!!!!!! (READ RICH)

Sylvie
Nick is right...Obama can't do anything yet! GWB is still President. There is no confidence yet in the markets...it is now being controlled by fear. When confidence returns the people that didn't sell will reap the rewards! Hang in there everyone...there is a light at the end of the tunnel!

Bernard Romanycia
Worthless paper money is not going to solve the mess that we're all going to be facing soon. Hyperinflation and rationing is just around the corner folks. Dare to prepare.

opinion
Oh wait, Harper & Flaherty said everything is OK! remember. Its one of two things, while we loss our investment savings they are either liars or are living in a dam fool paradise.

Rebecca in Edmonton
When the Bank of Canada cuts interest rates and prints more money at the private banks request to loan out more credit, our currency devalues and prices inflate.

Buy silver - and DO NOT ORDER gold or silver stocks because they are offering these stocks at a deflated value - if everyone was to cash in there wouldn't be enough gold or silver to meet the demand. Go to your independant coin dealer to purchase silver @$25 an ounce if you want some sort of savings after the economy bottoms out.

Pat_from_Mississauga
Sorry to rain on your parade Sylvie, but the stock markets might never reach the highs of just a year ago. When Japan's economy tanked in the early 90's, their stock market did not recover. It still has not recovered to 1990 levels (not even close). There is a real possibility that these losses are permanent and we may never see the markets back to where they were (i.e. not for another 20 years or so). But then again, maybe the markets will be back to where they were in a year or two. Who knows? Certainly not any economist you are likely to talk to.