Dow in correction territory as investors hit ‘sell’ button
North American stock markets closed sharply lower again today, ending what was a dismal week for equities as fears about the global economy and falling oil prices had many investors selling.
The main benchmark index of the Toronto Stock Exchange sank to its lowest point in almost 18 months. It ended a busy trading day down 263 points, or 1.9 per cent, at 13,473. That followed a drop of almost 300 points on Thursday. Once again, the heavily weighted financial and energy groups led the declines.
“Everybody’s concerned about China,” said David Baskin, president of Baskin Wealth Management. ‘If there’s lower growth or even a recession in China, obviously that has a major impact because that’s, by most measures, the second biggest economy in the world.”
Much of the TSX’s slide stems from oil, which has now declined for eight straight weeks. That’s the longest losing streak for oil since 1986, a time when OPEC drove the price down as low as $10 a barrel. Oil settled Friday at $40.45 US a barrel, down 87 cents. At one point, it traded as low as $39.86, the first time it had dipped below $40 since 2009.
The Dow Jones industrial average plunged 531 points, or 3.1 per cent, to close at 16,460. With that drop, the Dow entered official correction territory, which refers to a drop of at least 10 per cent from its most recent high.
The broader S&P 500 index suffered its biggest daily percentage drop in nearly four years.
European concerns
European markets were also rattled by news that Greek PM Alexis Tsipras would step down and hold new elections on Sept. 20.
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