The S&P/TSX composite index fell 102.73 points to 14,084.43.
But the damage wasn't primarily due to falling energy stocks, as has been the case recently. Instead, mining stocks sold off for a second day as copper prices plumbed lows not seen since the worst days of the 2008-2009 financial crisis.
The TSX base metals sector was down almost nine per cent on top of a similar-sized drop Tuesday as copper prices fell 14 cents to a six-year low of US$2.51 a pound.
Copper has been steadily weakening over the last year, losing about 25 per cent over the past year. But the decline in just the past two weeks has been fierce, down 12 per cent this month alone.
"The drop is quite troubling," said Himalaya Jain, director, portfolio manager at ScotiaMcLeod.
The fall in prices triggered a massive sell-off in the base metals sector with some premier metal stocks falling heavily as investors consider how falling metal prices will impact earnings.
For example, First Quantum Minerals (TSX:FM) was down $1.77 or 13.15 per cent to $11.70 after plunging 15 per cent on Tuesday, while Teck Resources (TSX:TCK.B), Canada's biggest miner, dropped 95 cents or 6.5 per cent to $13.71 following a six per cent slide the previous session.
Copper prices got a major shove Wednesday after the World Bank said it now expects the global economy to expand three per cent in 2015, down from its earlier forecast of 3.4 per cent. A strengthening U.S. economy and the fall in oil prices won’t be enough to offset troubles in the eurozone and emerging markets, the bank said.
But analysts are surprised by the speed of the decline and point out there is no big economic reason to explain the huge drop.
"What's interesting is, just like oil, the fundamentals for copper, things like supply/demand, that story hasn’t really changed substantially," Jain said.
"And similar to what is going on in oil, is you have a lot of short-term investors, including hedge funds, which are really driving the bus here. The spot market tends to be driven by a small number of investors and they have been making a lot of money going short on these commodities and that has emboldened them to look at other commodities as well."
Meanwhile, the Canadian dollar was ahead 0.07 of a cent at 83.72 cents US.
An earnings disappointment from banking giant JPMorgan Chase also helped send New York indexes well into negative territory.
The Dow Jones industrials dropped 186.59 points to 17,427.09, the Nasdaq fell 22.18 points to 4,639.32 and the S&P 500 index was down 11.76 points at 2,011.27 as U.S. retail sales fell 0.9 per cent in December, the largest decline since January.
Losses would have been higher on the TSX had it not been for a positive day for a change for both oil prices and energy stocks.
The energy sector gained 2.3 per cent as crude jumped $2.59 to US$48.48 a barrel. Oil prices improved mid-afternoon after the Federal Reserve said in its latest regional economic survey that the U.S. economy was growing at a moderate pace in December and early January, helped by gains in sales of autos and other consumer products, increased factory production and a pickup in tourism in various parts of the country.
Crude prices have collapsed since June 2014, down almost 60 per cent amid a glut of supply. Negative days for oil and energy companies have been the norm lately as the price slide accelerated from the end of November when OPEC said it wouldn't cut production to support prices.
Suncor (TSX:SU) is the latest energy giant to announce big spending cuts in response to falling oil. It expects its 2015 capital budget to be between $6.2 billion and $6.8 billion, down $1 billion from its spending estimate issued in mid-November. Suncor is also cutting 1,000 jobs and its shares edged up six cents to $34.87.
Financials were also a major drag, down 1.8 per cent as Royal Bank of Canada (TSX:RY) chief executive Dave McKay said the lender will begin testing its $9.6-billion portfolio of energy-related loans to see how it will perform if oil prices remain around US$45 a barrel for a prolonged period. RBC shares were down $1.02 to $75.68.
The gold sector faded about 1.26 per cent although February bullion added 10 cents to US$1,234.50 an ounce.
BlackBerry was a major advancer, up $3.42 or 29.5 per cent to $15.02 as Reuters reported that smartphone company Samsung has recently made overtures to buy the company for as much as $7.5 billion.