The Canadian stock market posted a triple-digit loss Friday as a drop in Canadian technology heavyweight Research in Motion (RIM) shares price led the way. The S&P /TSX composite index dropped 161.13 points or 1.22% to 12,263.71 as the information technology sector, as well as the influential financial, energy and mining sectors dragged it lower. The market ended the week down 0.9%.
RIM stock dropped 20%, wiping out $3 billion of the company’s stock value, after the BlackBerry maker reported lower device sales, weaker profits and revenues. RIM fell $5.90 to $23.50. The information technology sector was the biggest decliner, down 5.25%.
On Friday, the European Union’s 27 countries overcame a year of infighting to agree Friday to tougher budget rules that make it easier to punish overspending governments, but failed to produce any new measures that might contain the debt market turmoil threatening it. Top European Union officials rejected calls by Treasury Secretary Timothy Geithner to provide a decisive solution that would help Greece avoid a default on its debt.
Geithner’s presence at the informal meeting is a first for an American Treasury chief and is an indication of the international pressure building on European officials to fix their crisis and keep it from hurting the global economy. The group’s leader said Friday that it will not decide until next month whether Greece has qualified for its next round of bailout money. Worries about a possible default by Greece have weighed on financial markets all summer. There are widespread concerns that that kind of financial shock might tip the global economy back into recession.
In the U.S., the Labour Department reported that unemployment rates rose in a majority of states in August for a 3rd straight month, further proof that job growth is weak nationwide. The unemployment rates increased in 26 states. They fell in 12 and remained unchanged in 12.
But the Thomson Reuters/University of Michigan’s consumer sentiment index showed U.S. consumers were slightly more confident in the economy in September, but are increasingly worried about the future. The index inched up to 57.8 in September from 55.7 in August, according to a Reuters report. The August reading was the lowest since November 2008.
In the United States stocks rose for a 5th straight day on Friday and the S&P 500 scored its best week since early July on signs that leaders were taking action to limit the damage from a sovereign debt crisis.
The Dow Jones industrial average markets gained 75.91 points, or 0.66%, to 11,509.09, the Standard & Poor’s 500 Index gained 6.90 points, or 0.57%, to 1,216.01 and the Nasdaq Composite Index gained 15.24 points, or 0.58%, to 2,622.31.
The Dow rose 4.7% for the week, its 1st weekly gain in three. The Nasdaq Composite Index advanced 6.3% for the week, the best weekly percentage gain since July 2009. The S&P 500 advanced by 5.4%.
As mentioned, Wall Street has moved up as investors looked to developments in Europe, where U.S. Treasury Secretary Timothy Geithner joined finance ministers gathered to talk about the debt crisis that brings the threat of a default by debt-stricken Greece. The group said it would decide next month whether Greece would get its next round of financial aid.
In short, investors are looking for some kind of certainty between Europe and the U.S., and we’re hoping by October 11th for a conclusion to Greece, and more important Italy and Spain
This week stocks may extend their rally, with investors encouraged by euro-zone efforts to stem the region’s debt crisis, but gains are far from a sure thing as Federal Reserve and International Monetary Fund policymakers meet. The 2-day gathering of the Fed’s Federal Open Market Committee (FOMC) ends Wednesday and the IMF/World Bank gathering includes a speech by Greek Prime Minister George Papandreou in Washington Tuesday.
Also on deck are earnings from Oracle Corp., Adobe and Nike and U.S. economic data include housing starts and existing home sales.
This morning Wall Street was set to open sharply lower, as concerns escalated over the possibility of a Greek debt default, while the spotlight in the U.S. will be on President Barack Obama’s plan to reduce the federal deficit.
Futures on the Dow Jones Industrial Average dropped 139 points to 11,307 and those on the Standard & Poor’s 500 stock index fell 18.2 points to 1,193.60 and the Nasdaq 100 futures declined 32.5 points to 2,274.75.
In Greece, the cabinet of Prime Minister George Papandreou met on Sunday to discuss growing concerns over the nation’s ability to meet fiscal targets. The so-called ”troika” of international lenders are withholding the next disbursement of aid to Greece until the government comes up with a credible plan to meet its deficit-reduction commitments.
President Obama is expected to unveil his plan to reduce the federal deficit by more than $3 trillion over 10 years. He is due to speak at 10:30 a.m. U.S. Eastern Time in the White House.
The Wall Street Journal reported that the president’s plan includes $1.5 trillion in tax increases, mostly on wealthy individuals and corporations. The call for tax hikes is likely to be met with stiff resistance from Republican lawmakers.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
