Stock markets sink on earnings, Europe debt gloom
S&P/TSX composite index loses 178 points
Stock markets in North America and Europe struggled Tuesday and the Toronto stock market closed with a triple-digit loss amid disappointing earnings from U.S. firms and renewed concerns about Europe's debt crisis.
The S&P/TSX composite index closed down 177.70 points, or 1.43 per cent at 12,225.84, after earlier losing more than 260.
The Canadian dollar seesawed, losing early, then making gains on Monday's close after the Bank of Canada said it was keeping its key rate unchanged at one per cent while keeping intact language warning that it will raise rates at some point.
The currency was down 0.01 of a cent at 100.74 cents US. It had earlier traded around 100.35 cents, its lowest level since early August, amid speculation that the central bank's statement would contain language suggesting a less hawkish stance.
U.S. markets were lower in the wake of disappointments from Dow heavyweights DuPont and 3M.
The Dow industrials had their biggest drop since June, falling 243.36 points, or 1.82 per cent, to 13,102.53, the Nasdaq was down 26.50 points, or 0.89 per cent, to 2,990.46 while the S&P 500 index fell 20.71 points, or 1.44 per cent, to 1,413.11.
Chemical maker DuPont reported net income of $10 million US, or a penny per share. Excluding one-time items, DuPont earned 44 cents per share, compared with 69 cents per share for last year's third quarter.
Dupont cutting 1,500 jobs
The results fell short of the average estimate of 46 cents per share and the firm said it will cut 1,500 jobs.
And conglomerate 3M said its third-quarter profit edged up to $1.16 billion, or $1.65 a share, which met estimates. 3M also cut its 2012 profit estimate to a range of $6.27 to $6.35 a share, down from an earlier 2012 view of $6.35 to $6.50 a share, to reflect "current economic realities".
Analysts at Credit Suisse said in a report Tuesday that "roughly 25 per cent of the way through the U.S. reporting season, annual earnings per share growth is broadly flat."
Some of the disappointing revenue is because of weakness in foreign markets. Multinational companies are having a hard time selling to Europe, which is struggling under a debt crisis and a spreading recession.
"The recession in Europe is very real," said Bernard Schoenfeld, senior investment strategist for Bank of New York Mellon Wealth Management in New York.
"It's not going to disappear very quickly, and it will certainly negatively affect earnings of exporters in the United States."
Commodity prices retreated on fears of slowing economic growth a day after Moody's Investor Services downgraded five Spanish regions to below investment grade citing their "very limited cash reserves … and their significant reliance on short-term credit lines to fund their operating needs."
Spain has been the flashpoint of the eurozone's credit crisis as the country endures its second recession in three years with near 25 per cent unemployment after the property market collapsed in the wake of the 2008 financial crisis, at the same time crippling the country's banks.
Copper prices fell back with the December contract on the New York Mercantile Exchange down five cents at $3.57 US a pound.
Oil fell for the fourth day, with the December contract on the Nymex losing $1.98 to $86.67 US. December bullion gave back $16.90 to $1,709.40 US an ounce.
European markets were also sharply lower with London's FTSE 100 index closing down 1.41 per cent, Frankfurt's DAX off 2.11 per cent and the Paris CAC 40 down 2.20 per cent. The Euro was down 0.64 per cent at $1.30 US.
With files from The Canadian Press and The Associated Press