Market News: After the Bell



RTGAM






The stock market looked dazed on Wednesday - unable to muster a reaction to the U.S. administration's plan to keep homeowners from foreclosing on their mortgages, virtually ignoring the U.S. Federal Reserve's darker projection for the U.S. economy this year and staring blankly at Tuesday evening's demand by U.S. auto makers for another $19-billion (U.S.) to keep them out of bankruptcy protection.


The Dow Jones industrial average closed at 7555.63, up 3.03 points, or unchanged in percentage terms. The broader S&P 500 closed at 788.42, down 0.75 of a point, or 0.1 per cent.


Investors can see pretty much anything they want to see in these slight moves. Some may point out that the market is reacting very maturely, staying calm amid stunning moves by government, central bankers and corporations.


The VIX volatility index, a measure of how much fear there is in the market, has been in a fairly tight trading range this year and barely budged on Wednesday, actually falling 0.6 per cent.


Others may point out that, with major indexes mired near their previous lows in November, stocks are walking a tightrope, especially with the economic picture turning gloomier. The Fed said that it now expects the U.S. economy will contract between 0.5 per cent and 1.2 per cent in 2009, far worse than its November forecast which suggested a worst-case contraction of 0.2 per cent. As well, the Fed said the unemployment rate could rise as high as 8.8 per cent by the end of the year, up from its earlier forecast of 7.6 per cent.


The mild moves at the index level also hid more declines by financial stocks after former Federal Reserve chairman Alan Greenspan said in an interview with the Financial Times that nationalization could be the "least bad" solution to the ongoing U.S. banking crisis. Bank of America Corp. fell 6.7 per cent and Wells Fargo & Co. fell 4.7 per cent.


In Canada, the S&P/TSX composite index did not reflect the calm of its U.S. peers, closing at 8175.95, down 202.75 points, or 2.4 per cent, despite relatively stable commodity prices.


Royal Bank of Canada fell 4.2 per cent on souring sentiment on financial stocks everywhere. Research In Motion Ltd. fell 6.6 per cent and EnCana Corp. fell 3.7 per cent, after crude oil dipped below $35 (U.S.) a barrel.


Rogers Communications Inc. fell 7.7 per cent after the wireless and cable company reported a loss in the fourth quarter, disappointing analysts' expectations. As well, Loblaw Cos. Ltd. fell 1.2 per cent after the grocer reported a jump in fourth quarter earnings but warned of a challenging year ahead.

Copyright 2001 The Globe and Mail