Recession in the United States and panicking investors react to today's financial news.
The Toronto Stock Exchange's main index has crossed below the 9,000-point mark in intra-day trading for the first time since mid-January 2005 with a 610-point slide. New York's Dow Jones industrials was also off early lows, down 356.59 points to 8,222.6.
On the TSX this morning, energy stocks again got stomped as oil prices continued to retreat and financial stocks moved lower even as the government announced help for Canada's big banks.
New York markets also fell sharply, joining a series of big declines on stock markets around the world, as investors bailed out on continued fears centred on frozen credit.
Finance Minister Jim Flaherty announced that Canada Mortgage and Housing Corp. is buying up to $25 billion in mortgage-backed securities from the country's banks in an effort to maintain the availability of credit and stave off an US style credit crisis.
Canada's central bank lowered its rate 50 basis points in concert with its international counterparts on Wednesday, but the chartered banks initially responded by lowering theirs only 25 points.
The TSX energy sector dropped seven per cent as the November crude contract on the New York Mercantile Exchange pulled back $6.31 to US$80.28 a barrel as investors believe rapidly slowing economic conditions will curb demand.
General Electric, the oldest Dow component, reported third-quarter earnings in line with downwardly revised expectations. Profit fell 12 per cent from a year ago to US$4.5 billion while revenue rose 11 per cent to US$47.2 billion. GE said that its board has resolved to maintain the dividend at US$1.24 per share at least through next year and its shares rose 18 cents to US$19.19.
General Motors Corp. said today bankruptcy is still not an option, despite a dramatic stock plunge the day before that sent the automaker's shares to their lowest level in more than 58 years and wiped out nearly one-third of their value. Its shares moved up 18 cents to US$4.94. General Motors needs to cut $15.5 billion from its annual budget and has been hard hit by the Automotive Recession.
Citigroup Inc. said late Thursday it was suspending its bid to acquire Wachovia Corp., which will be acquired by Wells Fargo & Co. Citigroup shares rose 36 cents to US$13.29 and Wells Fargo added 50 cents to US$27.75.
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