News Column

Toronto down on correction anxiety

July 8, 2014

Telecoms weighing down market

Stocks in Toronto declined on Tuesday, hit by weakness in every major sector as investors grew nervous that the solid gains of recent months could spur a market correction.

The S&P/TSX composite index plummeted 145.65 points, or nearly 1%, to greet noon at 15,027.28

The Canadian dollar inched forward 0.07 cents to 93.68 cents U.S.

While the Toronto equity market eased for a second straight session, its benchmark index is still up about 10% since the start of the year.

Financials waned as Royal Bank of Canada lost 0.5% to $77.17, and Bank of Nova Scotia fell 0.8% to $71.70.

Shares of energy producers slipped with oil prices trading lower. Suncor Energy shed 0.8% to $45.09, and Canadian Natural Resources fell 0.8% to $48.70.

Telecoms shares remained in selloff mode, a day after the federal government announced a new spectrum auction that favours smaller industry players, and were one of the biggest drags on the market.

Shares of Telus weakened 2.4% to C$39.36 and Rogers Communications declined 2% to $41.50.

In corporate news, Intertape Polymer Group said late on Monday it raised its dividend by 50%. The stock shot up 9.6%, to $13.40.


The TSX Venture Exchange dropped 6.88 points to 1,023.75.

All 14 Toronto subgroups were lower, weighed mostly by health-care, 2.2% less hale, information technology issues, clicking 2% lower, and telecoms, sliding 1.5%


All three major U.S. indexes are retreating with the NASDAQ down a whopping 1.6%.

The Dow Jones Industrials slumped 132.97 points to 16,891.24

The S&P 500 eased back 15.83 points to 1,961.82, and the NASDAQ composite collapsed 71.55 points to 4,379.98.

Tuesday's selloff was most pronounced in the tech world, where some of big so-called momentum stocks were pulling back. Twitter shares tanked over 7.5% Tuesday.

Linkedin and Facebook were also losing big. Those stocks were down 6% and 4% respectively.

Aluminum producer Alcoa is scheduled to unveil its earnings after the closing bell, marking the start of the quarterly results season. Restaurant chain Bob Evans is also due to report after the close.

Shares of American Apparel plunged after the struggling company warned it received a notice of default from a lender related to last month's ouster of founder and CEO Dov Charney.

However, American Apparel disputed that default claim and is exploring ways to tap its revolving credit facility to repay the lender. The New York Post reported American Apparel has reached a preliminary deal to transfer control of the board to a hedge fund aligned with Charney.

Also on the fashion front, Guess rallied after the retailer was upgraded by analysts at Piper Jaffray, who pointed to strength in the company's European business.

With the S&P 500 index already up 7% this year, investors will be looking closely to see whether corporate profits can support stocks and to what extent markets have been relying on cheap money from the Federal Reserve to push indexes to new records.

Second-quarter earnings are expected to grow 4.9% compared to the same period last year, though that estimate is down from the 6.8% prediction at the start of the quarter, according to data from FactSet.

Prices for 10-year U.S. Treasuries surged, lowering yields to 2.56% from Monday's 2.62%. Treasury prices and yields move in opposite directions.

Oil prices slipped 14 cents to $103.39 U.S. a barrel.

Gold prices fell into the red $1.60 to $1,315.40 U.S. an ounce.

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Source: Baystreet Stock Market Update (Canada)

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