Market News: After the Bell


The close:
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Any confidence that had come creeping back into the stock market over the past few weeks was shredded on Monday, after renewed concerns about the financial sector and the rising possibility of bankruptcy in the auto sector sent investors scrambling for cover.


The Dow Jones industrial average closed at 7522.02, down 254.16 points, or 3.3 per cent. The broader S&P 500 closed at 787.53, down 28.41 points or 3.5 per cent. Both declines were the biggest one-day setbacks for the indexes since they began a three-week rebound that sent the S&P 500 up as much as 24.7 per cent from its intraday low - the steepest rise since the 1930s.


General Motors Corp. fell 25.4 per cent after the Obama administration rejected the auto maker's plan to stay viable, sacked its chief executive over the weekend and then floated the idea that it prefers a bankruptcy filing to reorganize the ailing company.


Although GM has withered to a relatively minor part of the stock market, given that it trades at just $2.70 (U.S.) a share, investors are clearly concerned about widespread layoffs, not to mention the impact on parts suppliers. Still, despite the threat of bankruptcy hanging over the stock, it is still trading more than 110 per cent above its low point in early March.


Financials were also weak on Monday, after the U.S. Treasury Secretary said in a weekend interview that, despite some optimism in the sector, some banks are going to need considerable government assistance. At the same time, a draft communique from the G20 dashed hopes for a recovery in the second half of this year, instead suggesting that the global economic slowdown could persist until the end of 2010.


Citigroup Inc. fell 11.8 per cent and Bank of America Corp. fell 17.9 per cent. General Electric Co., which has a large and struggling financial arm, fell 7.9 per cent - taking the stock back below $10, to $9.93.


In Canada, the S&P/TSX composite index closed at 8596.22, down 224.84 points, or 2.6 per cent. The index, which had poked into positive territory last week for the year to date, has now fallen 4.4 per cent in 2009.


Among financials, Manulife Financial Corp. fell 8.5 per cent, Royal Bank of Canada fell 3.2 per cent and Toronto-Dominion Bank fell 4.2 per cent.


Energy stocks were down after the price of crude oil fell below the threshold of $50 a barrel again, to $48.41, down $3.97. Suncor Energy Inc. fell 3.8 per cent, Talisman Energy Inc. fell 1.5 per cent and Canadian Natural Resources Ltd. fell 5.3 per cent.


Gold producers were among the few winners, even though the price of gold fell to about $915 an ounce, down nearly $8. Barrick Gold Corp. rose 3 per cent and Goldcorp Inc. rose 2 per cent.

Copyright 2001 The Globe and Mail