ECONOMY: Bank of Canada drops key rate to record low
The Toronto stock market piled on more losses Tuesday, squeezed by the financial sector despite positive earnings from the Bank of Montreal and Scotiabank and the Bank of Canada's decision to cut its key rate by half a point.
Toronto's S&P/TSX composite index made triple-digit swoops in both directions before closing down 55.89 points to 7,631.62 after dropping five per cent Monday to its worst level since the fall of 2003.
There was little market reaction to a widely expected cut in the central bank's key rate to 0.5 per cent in an attempt to mitigate the worst effects of a rapidly worsening downturn.
The bank said the outlook for the global economy has deteriorate, with weaker-than-expected activity in major countries. "The nature of the U. S. recession, with very weak auto and housing sectors, is particularly challenging for Canada," the central bank noted.
The TSX Venture Exchange was down 4.17 points to 824.07, while the Canadian dollar closed up 0.01 cent to 77.45 cents US.
The Dow Jones industrial average gave back 37.27 points to 6,726.02.
The loss added to a 300-point plunge Monday which took the index under 7,000 for the first time in more than 11 years in the wake of a US$62-billion quarterly loss posted by insurer American International Group, the biggest quarterly loss in corporate history.
The Nasdaq composite index was down 1.84 points to 1,321.01, while the S&P 500 index edged 4.49 points lower to 696.33, closing under the 700 mark for the first time since Oct. 28, 1996.
"You can see that there could be some very sharp rallies in this market, but you just keep hearing people say, 'Oh God, give me a rally so I can sell'," said Chyanne Fyckes, chief investment manager at Stone Asset Management.
"I think by virtue of mathematics, next year will be better because the numbers this year are going to be so bad ... they won't look OK relative to maybe 2007, but it's going to look better than it was this year."
Major automakers' U. S. sales eir deep slump in February, with Ford Motor Co.'s U. S. sales down 48 per cent from a year earlier, while Toyota Motor Corp. posted a 40 per cent drop.
