The bears are reveling in a perfect storm for the markets today. Negative corporate news, negative geopolitical news and negative economic news are all converging to produce a massive sell-off.

The S&P/TSX index is down 181 points at midday, more than 2%, to 8354. Volume is very heavy at 195.6 million shares, with the selling action swamping the buying by a margin of more than 10 to one. Market breadth is heavily negative too, as losers outnumber winners by a three to one margin.

The S&P/TSX Venture index is taking it hardest of all. It has lost 3%, dropping 53 points to 1673. Volume is strong at 40.4 million shares. Entree Gold is the top trader, up a penny to $1.14 on 3.9 million shares.

In New York, bad news is driving trading there too, including word that Comcast has scrapped its hostile bid for Disney Corp. The Dow is down 94 points at midday to 10385. Nasdaq has dropped 28 ticks to 2005.

The big corporate news in Canada is that Nortel Networks Corp. has fired its three top executives, including CEO Frank Dunn, and its CFO and controller, over accounting irregularities. It also suggested that it may have to cut last year’s earnings numbers by as much as 50%.

The pain isn’t limited to Nortel however, as U.S. attacks on Fallujah in Iraq have heightened geopolitical tensions. As well, a Chinese central banker suggested that its efforts to cool that economy down are working. This news is conspiring to take a load of air out of resource stocks and commodity prices, particularly golds, which were up strongly on booming Chinese demand.

On Bay Street, every sector on the TSX is down, apart from biotechs and real estate. There are small gains in those areas, but not nearly enough to offset the 7% drop in techs, the 4% slide in miners, or the 4.7% plunge in golds. Materials, industrials, energy and financials are all down notably too.

Nortel is taking the hardest hit today, down more than 25% on huge volume of 48.4 million shares. If there’s any good news in this story, it’s that the TSX has handled all the volume with ease. William Owens has been appointed president and CEO of the company, with William Kerr added as CFO and MaryAnne Pahapill as controller. The firm’s audit committee has not yet determined the full extent of the adjustments that will be required.

With Nortel now sitting as a big unknown, there’s also big weakness in other techs too. Tundra Semi is down almost 9%, and Mitec is 10% lower at midday. Research in Motion is just 2% lower. And, BCE has dropped a mere 0.3%.

The other area that’s really feeling it today is resources. Inco is down almost 5%, Alcan has dropped 2.7%, and Barrick has lost 3.7%. There is also selling in Bema Gold, NA Palladium, Minefinders, Canfor, Suncor Energy, Northern Orion Resources, Southwestern Resources, Northgate Exploration, and EnCana.

EnCana also reported first quarter 2004 operating earnings were $465 million, down 9% from $510 million in the first quarter of 2003, due largely to lower realized natural gas and oil prices.

Manulife Financial is leading that group lower, as it closes its deal for John Hancock Financial Services. It has dropped 2% in heavy volume. Sun Life, Scotia and Royal Bank are 1% lower, but CIBC and Bank of Montreal are down just 0.5%, and TD Bank is actually up a little.
There are actually a few winners amid all the blood-letting today, but to make gains you better have a damn good story. One such story is Macdonald Dettweiler, which is up 5% on news that it is buying insurance sector supplier Marshall & Swift/Boeckh.

Biovail has gained 4% on news that it has submitted a new drug application to the U.S. Food and Drug Administration following phase III clinical trials.

Agrium is ahead by 3.6% after reporting that it earned US$12 million in its first quarter.And, Thomson is up 3% on first quarter earnings of US$37 million.

How bad is the market today? Atlas Cold Storage is starting to look good to traders. The troubled income trust is up 2%.
There’s a ton of other earnings news out today too. Dorel said that its earnings increased to US$19.6 million in its first quarter. However, the company is recording a charge of $6.5 million due to a dispute with one of its insurance carriers over the total amount of insurance available to the company. As a result, Dorel is reducing its guidance for fiscal 2004 by 13¢ per share, to earnings of between $3.12 to $3.22 per share. Dorel is also initiating legal action against TIG Specialty Insurance Solutions, a subsidiary of Fairfax Financial Holdings Inc.