TORONTO - The Toronto stock market racked up a sharp, triple-digit decline for a second session as worries about an economic recovery persuaded investors to take more profits from the spring rally.
"We've had quite a market run for a few months and now it's time for a pause," said Norman Raschkowan, chief investment officer at Mackenzie Financial Corp.
"You have to wait for fundamentals to sort of catch up with where asset prices have gotten to."
The S&P/TSX composite index closed down 183.08 points to 9,844.35.
The loss followed a slide of 256 points or 2.5 per cent Monday as investors continued to react to a much worse than expected U.S. employment report for June last week, that cast further doubt on an economic recovery being in place by the end of the year.
While the energy sector continued to suffer from falling oil prices, it was the financial sector that led Tuesday's losses, dropping 2.5 per cent as Royal Bank (TSX:RY) stepped back $1.91 to $45.78.
Manulife Financial Corp. (TSX:MFC) shares were off three cents to $19.04 after the insurance giant said Monday it would issue $1 billion in notes to boost its Tier 1 capital.
The energy sector added to a loss of about four per cent Monday, losing another 1.2 per cent as the August crude contract on the New York Mercantile Exchange fell $1.12 to US$62.93 a barrel. Crude prices were down for a fifth day and are down almost nine per cent since the beginning of the month.
The drop in the price of crude has sent energy stocks falling as investors anticipate that a weaker world economy will mean less demand. Canadian Natural Resources (TSX:CNQ) fell 96 cents to $54.94.
The Canadian dollar moved down 0.51 of a cent to 85.76 cents U.S. amid positive news from the housing sector.
Statistics Canada reported construction intentions were up 14.8 per cent from April, due to gains in both residential components and two of the three non-residential components. The value of permits surpassed the $5-billion mark in May for the first time since last October.
The TSX Venture Exchange was up 4.93 points to 1,069.56.
U.S. markets were weak as traders waited for some signals about where the economy is headed.
Energy and industrial shares posted the biggest losses in New York where the Dow Jones industrial average lost 161.27 points to 8,163.6.
The Nasdaq composite index was down 41.23 points to 1,746.17 while the S&P 500 fell 17.69 points to 881.03.
Investors have become more tentative in recent weeks after the market's spring rally, which sent indexes as high as about 40 per cent. Some fear they might have been too optimistic in March and April about how soon the economy might recover from the recession.
"Our view is that the economy is still in a precarious state," said Ben Halliburton, chief investment officer of Tradition Capital Management in Summit, N.J.
"The weak consumer, driven by very high unemployment, destroyed wealth and unavailable credit is going to continue to be a major drag on the U.S. economy."
Investors are also looking to the kickoff of the U.S. second-quarter earnings season on Wednesday. Aluminum maker Alcoa Inc. is expected to post a second-quarter loss of 37 cents per share. Its stock finished 15 cents higher to US$9.41.
Industrial stocks were also a major weight in Toronto, where the sector fell 3.6 per cent with railway stocks taking it particular hard. Canadian National Railways (TSX:CNR) dropped $2.70 to $45.45.
The August bullion contract on the Nymex closed $4.80 higher to US$929.10 an ounce.
Shares in drugstore chain the Jean Coutu Group (TSX:PJC.A) were ahead 10 cents to $9.48 after the company said that quarterly net earnings came in at $10.3 million, or four cents per share, reversing year-earlier losses of $20.2 million or eight cents per share.
The profits came despite a loss of $30.9 million or 13 cents per share from its stake in Rite Aid, a U.S. drugstore business in which the company owns a stake.
In other corporate news, timber giant Weyerhaeuser (NYSE:WY), which has been losing money because of the moribund U.S. housing market, is cutting its quarterly dividend to five cents US from 25 cents. Its shares fell $2.22 to US$27.77.