Rather than catching today’s big rally in the U.S., traders on the Toronto Stock Exchange are still digesting the big market drop in the U.S. yesterday. At midday today, the S&P/TSX index is down 41 points to 6,495.

Volume remains quite weak at 69.3 million shares, about evenly split between buyers and sellers. Losers are outnumbering winners by about 17:11.

Gold stocks are leading the way down, dropping 4.4%, joined by 2.5% drop in materials and 2% in both consumer discretionary and diversifieds. Fears of a double-dip recession in the U.S. are hitting some of these core economy businesses. Real estate, health care and industrials are down too. However, utilities and consumer staples stocks are resisting the selloff.

U.S. economic fears are really biting names such as Alcan, Barrick, Placer Dome, Cameco and Teck.

The financials are also caught in the selling, with Manulife down 1.7% in active trading. Fairfax Financial has dropped almost 5%. The banks are a bit more sanguine, as traders talk up the possibility of future rate cuts in the U.S. Royal Bank is flat, Scotia is down, but Bank of Montreal is a bit stronger.

Other losers today include Shaw Communications, down almost 13%. Goldcorp and Stratos Global are weaker, too.

On the upside, there are names that skipped the selloff and are following today’s big rally in the U.S. Nortel Networks and JDS Uniphase are both up about 2%. There are also gains in EnCana, Transalta and Aurado Exploration. Ballard Power and Moore Corp. are also making gains.

In earnings news, Ultra Petroleum reported earnings of $1,306,868 for the quarter ending June 30, compared with $4,273,722 for the same period in 2001.

KeyWest Energy saw earnings down 8% to $2.6 million.

Skyjack had a net loss of $448,000 for the first quarter of fiscal 2003, compared with net loss of $7.1 million in the first quarter of fiscal 2002.

Glamis Gold posted net income of $3.4 million in the second quarter of 2002, compared with net income of $1 million in the second quarter of 2001.

In New York, yesterday’s recession fears have been replaced with hopes that the Federal Reserve will cut interest rates soon to avert another slump. The Dow Jones industrial average is up 313 points today, wiping out yesterday’s loss, to sit at 8,357. Similarly, the S&P 500 has gained 33 points to 868. The Nasdaq composite index has added 55 points to 1,261.

The weakness in Canada is afflicting the small caps, too, with the S&P/TSX Venture index down 11 points to 1,026. Volume remains soft there too at just 10.1 million shares. Advectus Life Sciences is the day’s top trader, flat at 12¢ per share, on 1.1 million shares traded.