Market News: After the Bell




RTGAM






Any hopes that North American stock market indexes would rebound enough to post only slight losses - or even slight gains - on Friday were quashed in the final 15 minutes of trading when weekend jitters took control and a dividend cut by General Electric convinced already jaded investors that no dividend is safe.


The Dow Jones industrial average, down sharply at the start of trading and up a smidgen just after noon, closed at 7062.93, down 119.15 points, or 1.7 per cent - though it was saved from a steeper loss by a 3.4 per cent gain by International Business Machines Corp., by far the biggest-weighted stock in the index. The broader S&P 500 closed at 735.09, down 17.74 points, or 2.4 per cent.


Both indexes closed at fresh 12-year lows after first crossing that threshold on Monday, and ruined whatever hope investors had earlier in the week for a sustainable rally.


As usual, financials led the declines after Citigroup Inc. announced a deal in which more than $50-billion (U.S.) worth of preferred shares would be converted into common shares, diluting existing shareholder holdings and giving the U.S. government control of more than one third of the struggling firm.


Sensing creeping nationalization of the weaker U.S. financial firms, investors ran for it, sending Citigroup shares down 39 per cent and Bank of America Corp. shares down 25.8 per cent.


As well, General Electric Co. fell 6.5 per cent after the conglomerate did what the market had been expecting: It cut its formerly ultra-reliable quarterly dividend to just 10 cents a share from 31 cents, saving $9-billion a year in the process. Still, the market's reaction was hardly one of panic: GE's shares merely slumped back toward their lows on Tuesday.


Pharmaceutical stocks were also hit hard on concerns that health care reforms within President Barack Obama's proposed U.S. budget will clip their profitability. Merck & Co. Inc. fell 7.1 per cent and Pfizer Inc. fell 3.1 per cent.


In Canada, the S&P/TSX composite index closed at 8123.02, down 63.80 points, or 0.8 per cent - but at least it ended nearly 120 points above its lows earlier in the day. Financials were weak, following the direction of their U.S. counterparts. Royal Bank of Canada fell 3.1 per cent, Toronto-Dominion Bank fell 1.5 per cent and Sun Life Financial Inc. fell 6 per cent.


Energy stocks were mixed after the price of crude oil recovered from earlier losses but ended the day down slightly, at $44.76 a barrel, off 46 cents. Suncor Energy Inc. rose 3.1 per cent and Canadian Natural Resources Ltd. fell 1.8 per cent.

Copyright 2001 The Globe and Mail