By Jeff Sanford
(June 29 – 16:30 ET) – Perhaps it was the news that the OSC is claiming that the Royal Bank tried to thwart their investigation of stock price manipulation at RT Capital that had the markets in a dark mood today. Whatever the cause, after a day long slide into the red, the TSE 300 composite index finished down 120.35 points at 10.111.98.
Declining issues outnumbered advancers 694 to 418 on extremely light volume of just 117 million shares.
After a couple of days of gains index heavyweights Nortel and BCE had much to do with the drop. They were off $1.20 and 75¢ respectively. Negative news about the earnings potential of cell phone giant Ericcson did much to spook the entire tech sector.
ATI Technologies was also off 2.33% on the day after a less than stellar third-quarter earnings report.
Most the sub-indices were also down today, with 12 of 14 heading lower. Industrial products, home of the tech stocks, dropped 1.03%. The gold and precious metals index was also down substantially, posting a 3.03% loss on the day. Biotech stocks pushed the consumer products sub-index up 1.56%.
The CDNX was also off on the day, dropping eight points to finish at 34,49.24.
The Canadian dollar ended the day down 0.14¢ to end the day at US67.44¢.
It was similar story in the U.S. as all markets finished lower. The Dow Jones Industrial Average shed 128.69 points to close at 10,399.10. Again, tech stocks were the big losers with Cisco and WorldCom Inc. leading the way down on NASDAQ. The tech-heavy composite lost 63.11 points to finish at 3,877.23.
The S&P 500 was also down 12.43 points to 1,442.39.
Coming a day after the FOMC decided not raise rates in light of mounting evidence the U.S. economy is slowing, the U.S. commerce Department reported that consumer spending — a major indication of economic growth — was up 7.7% in the first quarter, the biggest advance in 17 years. As well, the U.S. gross domestic product was up 5.5% over the same period. That’s up 0.1% from earlier estimates.
The conflicting signals from the economy could mean a summer of hesitant markets as investors indecision becomes the guiding theme. Indeed the FOMC used the words “tentative” and “preliminary” to describe the state of inflationary signals in its policy report released after its meeting yesterday.
On the other hand, if investors come to the opinion that the Fed is nearing the end of its tightening cycle, with September being the last hike, we could see a rally in late summer or early fall. That prediction comes from no less a distinguished market watcher than Abbey Cohen of Goldman Sachs.