The S&P/TSX composite index dropped 72.8 points to 14,384.92 as traders also digested a big miss in Canada's December job numbers. Statistics Canada says the country lost 4,300 jobs in December but the national unemployment rate was unchanged at 6.6 per cent. Economists had expected the economy to crank out 15,000 jobs last month.
The Canadian dollar was down 0.22 of a cent to 84.27 cents US.
New York indexes were sharply lower after two days of major advances amid far more encouraging employment news as the U.S. economy created 252,000 jobs last month, comfortably above the consensus of 230,000. The jobless rate fell to 5.6 per cent from 5.8 per cent but investors were discouraged by other data showing a drop in wage growth, raising a note of caution about the economy.
The Dow Jones industrials fell 170.5 points to 17,737.37, the Nasdaq declined 32.12 points to 4,704.07 and the S&P 500 index was down 17.33 points at 2,044.81.
The TSX had racked up solid gains the previous two sessions but closed out the first full week of 2015 trading with a loss of 369 points or 2.5 per cent, led by a drop of about six per cent in the energy sector as oil prices continued to look for a bottom. Prices have plunged more than 50 per cent from mid-2014 highs and are down eight per cent just since Dec. 31 as the global economy works through a huge oversupply of crude, a situation analysts believe will take months to sort out.
However, the TSX energy sector was positive Friday, ahead 0.25 per cent while the February crude contract in New York was down 43 cents at US$48.36 a barrel after rising the previous two sessions.
The financials were also a major drag this week, down 1.45 per cent Friday for a decline of almost five per cent this week. The collapse in oil prices leaves investors wondering how banks will be impacted but there other things worrying traders as well.
"The Bank of Canada came out at the end of last year saying consumers have a lot of debt, (that) real estate values are overvalued, and then you have oil on top of that as well," observed Sadiq Adatia, chief investment officer at Sun Life Global Investment.
"And it’s not just oil prices being low, it’s the fact that oil companies as whole, who normally deal with banks for lending and so forth, they’re cutting back on their spending, meaning they’re borrowing less from the banks and that means banks’ revenues will come down as well."
The base metals group was 0.15 per cent lower as March copper lost two cents to US$2.75 a pound.
The gold sector ran ahead about 4.7 per cent as February bullion was ahead $7.60 at US$1,216.10 an ounce.
Elsewhere on the TSX, TransCanada Corp. (TSX:TRP) was ahead 41 cents to $55.34 after a Nebraska court struck down a lower-court decision that had been one of the barriers to the stalled Keystone XL pipeline. The end of the Nebraska case means President Barack Obama can soon wrap up his administration's review of the $8-billion pipeline, which has become a major irritant in Canada-U.S. relations.