The Toronto Stock Exchange slipped back into the red on Tuesday as oil futures fell lower and financial stocks tumbled, dragging the benchmark index down 2%.

The S&P/TSX composite index fell 169.56 points to end at 8,397.56.

A majority of financial companies gave back the gains their stocks earned in Monday’s session. The group fell 5.3% on Tuesday as the Bank of Canada cut its key interest rate by 75 basis points.

Royal Bank of Canada shares shed 5.9% after the bank announced late on Monday that it would issue 56.75 million common shares to raise $2 billion in capital. RBC shares finished the day at $35.29, down $2.21.

Bank of Nova Scotia shares tumbled 7% to $32.34 and Toronto-Dominion Bank shares were down 7.5% to $42.10.

Manulife Financial Corp. shares fell 4.5% to $20.25.

Energy companies on the TSX were flat, down just 0.01% as oil futures fell lower. Crude for January delivery dropped US$1.64, or 3.74%, to end at US$42.07 a barrel on the New York Mercantile Exchange.

Falling lower in the energy group were Canadian Natural Resources Ltd., down 3.1% to $40.90, and Husky Energy Inc., down 4.6% to $29.95.

Others managed to move further into positive territory, including Suncor Energy Inc., higher by 2.9% to $23.97 and Addax Petroleum Corp., up 11.5% to $16.95.

Heavily traded Oilexco Inc. shares gained another 7.2% to $2.09 on anticipation that the Calgary-based company will be acquired.

The materials group was a bright spot on the TSX, adding another 1.5% onto Monday’s 9% gains.

This was helped by a boost in gold futures, which drove the sub-gold index up 1.5%. Gold for February delivery rose US$4.90, or 0.64%, to end at US$774.20 an ounce on the New York Mercantile Exchange.

Among mining industry gainers were Barrick Gold Corp., which gained 2.2% to end at $35.10 and Goldcorp Inc., which moved up 2.1% to $30.94.

Shares of Potash Corp. gained 1.4% to close at $78.07 despite an announcement that the company would cut production by 20% next year due to a short-term decline in demand.

Other materials stocks dipped lower, including Major Drilling Group International Inc., which tumbled 8.9% to $9.99 after announcing expectations of a significant slowdown in base metals exploration next year.

Telecommunications stocks fell 2.3% after the Conference Board of Canada forecast that the sector’s profits would flatten in the next couple years amid a worsening economy and new wireless competition.

BCE Inc. shares fell 8.7% to $22.50 despite news that the company hired another accounting firm in an attempt to salvage its $52-billion takeover.

Junior companies on the TSX Venture Exchange fell 12.16 points, or 1.7%, to end at 686.02.

The Canadian dollar resumed its descent, slipping US0.66¢ to close at US79.08¢.

In New York, investors witnessed similar market declines.

The Dow Jones industrial average shed 242.85 points, or 2.7%, to end the day at 8,691.33.

The S&P 500 index fell 21.03 points, or 2.3%, to 888.67, pulled down by losses among financial, consumer discretionary and telecommunication stocks.

The Nasdaq composite dipped 24.4 points, or 1.5%, to 1,547.34.