Stocks under pressure over U.S. banking worries; oil tumbles
Canada's main stock index lost 383 points on Tuesday as investors continued to fret over the health of the U.S. financial system and oil prices tumbled.
The S&P/TSX composite index shed 2.8 per cent to close at 13,357.56. Every sub-index except health care was down, lead by energy, financial services, metals and materials.
Oil prices tumbled Tuesday in a volatile session. Crude was down at one point by $9.16 US per barrel as Federal Reserve chairman Ben Bernanke offered a pessimistic picture of the U.S. economy. The price of light, sweet crude for August delivery later settled at $138.74 a barrel, down $6.44 on the New York Mercantile Exchange.
The Reuters news agency said the price drop at the close was the biggest one-retreat since the start of Operation Desert Storm in the Persian Gulf in 1991.
Bernanke told U.S. politicians that the economy is likely headed for slow growth for the next several years, and there is much uncertainty even in that prediction.
The energy group was down more than four per cent on the TSX. Among individual stocks, Suncor fell six per cent to $57.92, while EnCana dropped almost four per cent to $83.22.
The financial services subgroup was taking a big knock as investors reacted to fallout from problems with U.S. government-sponsored mortgage giants Fannie Mae and Freddie Mac.
In New York trading, Fannie Mae fell 27 per cent to $7.07 US while Freddie Mac ended 26 per cent lower at $5.26 US.
Among the Canadian banks, TD was down four per cent at $53.51, while CIBC gave up three per cent to finish at $49.56. Royal Bank and Bank of Montreal both fell just over two per cent to $40.18 and $39.27, respectively. Scotiabank dipped 1.4 per cent to $43.20.
The TSX information technology sub-index was lost 2.3 per cent, with Research in Motion falling $2.51 to close at $106.21.
On Wall Street, the Dow Jones industrial average fell 92.68 points to 10,962.54, while the Nasdaq Composite index managed a thin gain of 2.84 points, finishing at 2,215.71.
General Motors, which announced another round of cost-cutting on Tuesday, gained 46 cents to close at $9.84 US.
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