Stock markets take huge hit as U.S. retail sales slide
North American stock markets went into a broad, deep sell-off on Wednesday following weak economic data out of the United States.
In Toronto, the S&P/TSX composite index was off 368 points, or 3.65 per cent, to close at 9,790 in afternoon trading. It was the first session in five in which Toronto's main index slipped below the 10,000 mark.
New York's Dow Jones Industrial Average fell by 2.18 per cent in Wednesday's session, or 184 points. That left the U.S. exchange at 8,284 points.
Investors dumped stocks in the wake of a report by the U.S. Department of Commerce showing that American retail sales dropped 0.4 per cent in April.
The retail numbers were unexpectedly weak. Earlier in May, Walmart Stores Inc., the world's biggest retailer, had better-than-believed sales in the month.
The retail sector makes up approximately two-thirds of U.S. economic activity.
In addition, another report showed that April foreclosures in the United States hit a new record.
Nervous investorsIn different economic times, stockholders might have shrugged off either piece of economic data.
For weeks, however, investors have been nervously waiting for signs that rising stock markets were in fact overly inflated, industry experts said.
"Investors prefer to hear the optimistic view of the future. I do, too, but I'm a little skeptical that it's time to jump in with both feet," wrote Adrian Mastracci, a portfolio manager with Vancouver-based KCM Wealth Management.
The retail and mortgage data sent many investors to the "sell" window on the theory they would lock in recent financial gains in their portfolios.
In Toronto, the financial services subsector tumbled seven per cent while energy stocks fell by 6.48 per cent.
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