Early positive reading may have been data glitch
Despite early reports of encouraging increases, the Toronto stock market tumbled again Friday, a day after investors punished stocks and sparked the worst one-day decline in two years, with no comfort coming from a stronger-than-expected reading on U.S. employment.
The S&P/TSX composite index fell 216.03 points or 1.74% to 12,164.1, led by sliding resource stocks as investors feel slowing economic conditions will heavily impact demand.
“Investors are still a bit concerned about the slowdown in global growth and the worries that Europe may not get its arms around what looks like continuing problem with the size of debt,” said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.
“As a result, we’re seeing declines in resource prices and particularly resource stocks which are very heavy in the TSX.”
The junior TSX Venture Exchange was off 36.8 points to 1,816.53.
It had been hoped that a decent jobs number from the U.S. would lessen anxiety about the state of the influential American economy.
But the announcement that 117,000 were created in July was simply not enough to brighten investors’ mood, said Andrew Pyle, investment adviser with ScotiaMcLeod in Peterborough, Ont.
“These aren’t great numbers, right?,” Pyle said.
“They’re not amazing numbers, not amazing headlines – when was the last time we got excited over 117,000 increase in jobs?”
Meanwhile, stock market operator TMX Group said it was investigating an early problem with index data – there was an initial positive reading shortly after the market open, which stayed unchanged for the next 10 minutes.
The U.S. Labour Department’s non-farm payrolls report Friday said employment rose by 117,000 in July, higher than the approximately 80,000 jobs that economists expected. Also, the jobless rate edged down 0.1% to 9.1%.
There was more good news: the data also showed that the economy created 56,000 jobs more than originally thought.
The data came out a day after pessimism over the U.S. economy and the big debt problems facing eurozone countries such as Spain and Italy pushed the TSX down 436 points.
