TORONTO — North American markets delivered a "dose of reality'' to investors Thursday, as it pulled back sharply, led by declines in metals and financial stocks.
The S&P/TSX composite index lost 227.58 points to 14,892.96 points.
The Canadian dollar also fell 0.33 of a cent to 90.11 cents US, pressured by lacklustre commodity prices. It fell briefly below 90 cents in mid-day trading.
The big drop Thursday follows four days of declines on the Canadian stock market and takes the TSX below 15,000 for the first time since late June. However, the S&P/TSX composite was still up nearly 10 per cent so far this year.
The sell-off could also be seen across Wall Street, which was on track to end the day with the deepest drop in two months. The Dow Jones industrials fell 237.66 points to 16,972.40. The Nasdaq dropped 81.01 points to 4,474.23 and the S&P 500 index lost 28.65 points to 1,969.65.
Shares in Apple (NASDAQ:AAPL) sank more than three per cent, or $3.39 to US$98.36, a day after the tech company pulled the latest software update for its iPhone software after customers complained about dropped calls. Rival Blackberry (TSX:BB) also saw its stock fall nearly six per cent, or 52 cents, to $11.09. The Waterloo, Ont., company released its latest smartphone, the Passport, on Wednesday and is expected to release its latest earnings on Friday.
"Investors in Canada over the near term have become complacent because the Canadian market has outperformed,'' said Brian Belski, chief investment strategist for BMO Capital markets.
"The issue when stocks go up is that you're believing it more, and now all of a sudden, Canadian stocks are receiving a dose of reality.''
Belski said some of the downward pressure could be attributed to profit-taking, but mostly, the market is pulling back from the recent highs.
"We really feel that the momentum trade, especially in the energy and materials space has really skewed prices to the upside so far this year,'' Belski said. "Now the resulting momentum shift is turning the other way.''
Financial stocks were among the biggest decliners on the Toronto exchange, down 2.18 per cent. Out of the country's five biggest banks, CIBC suffered the biggest loss, as its shares took back 3.43 per cent, or $3.60, at $101.36.
The November crude oil contract dipped 27 cents at US$92.53 a barrel. The December gold bullion contract added $2.40 at US$1,221.90 an ounce, while December copper fell two cents at US$3.03 a pound.
The move lower came amid signs the U.S. economic recovery is moving at a tepid pace.
The U.S. Labor Department said weekly unemployment benefit applications rose 12,000 to a seasonally adjusted 293,000, while business orders for long-lasting manufactured goods fell by a record 18.2 per cent in August, dragged lower by a plunge in demand for commercial aircraft.
Meanwhile, shares in Valeant Pharmaceuticals (TSX:VRX) were up more than three per cent or $4.17 at $141.46 on the Toronto Stock Exchange.
The Canadian drugmaker said Thursday that Jeffrey Ubben, founder, chief executive and chief investment officer of health care investment manager ValueAct Capital, would join the company's board on Oct. 1. ValueAct president Mason Morfit had sat on the board until earlier this year when he stepped down citing other commitments.
Valeant has been actively pursuing a takeover bid for Botox-maker Allergan maker. The Irvine, Calif., based company has rejected several acquisition bids from Valeant, the latest amounting to about US$53 billion.
Retailer Sears Canada (TSX:SCC) says its chief executive, Douglas Campbell, intends to resign and return to the United States by the end of this year to tend to personal family issues. Campbell had headed the struggling company for about a year after its last CEO, Calvin McDonald, announced he was leaving the company in the midst of a three-year turnaround plan. Shares in the company were up 37 cents at $13.02.
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