File photo of a screen showing the TSX composite index down over 200 points in the afternoon at the TMX Broadcast Centre in The Exchange Tower in TorontoDeborah Baic/The Globe and Mail
Stocks fell for the second straight day as investors fretted over a disappointing Spanish government bond auction and ongoing concerns that the Federal Reserve might not be forthcoming with another round of stimulus.
The Dow Jones industrial average closed at 13,074.75, down 124.80 points or 1 per cent. The broader S&P 500 closed at 1398.96, down 14.42 points or 1 per cent. In Canada, the S&P/TSX composite index closed at 12,178.66, down 144.95 points or 1.2 per cent.
The declines follow rocky moves overseas as well, with European stocks down sharply after Spain attracted tepid interest in its first bond auction since the government unveiled its austerity budget last week. Bond yields also rose – not only in Spain, but also Italy and Portugal as well – stirring concerns about rising borrowing costs within the indebted nations.
Closer to home, the news was far more upbeat. The ADP report on private sector employment showed a gain of 209,000 in March, beating estimates from economists and providing a nice setup to the official government payrolls report, to be released on Friday morning.
The ISM report on non-manufacturing activity fell to 56 in March, down from February and slightly below economists' expectations. However, it remained well within expansion territory.
However, investors are likely still adjusting to what they learned from Tuesday's release of the Federal Reserve's minutes from its last monetary policy meeting. Those minutes suggested that the Fed was not preparing another round of policy stimulus to help juice the economy.
Gold has been among the biggest casualties from this shift in tone from the Fed. It fell another $57.90 (U.S.) an ounce on Wednesday, bringing it to a 12-week low of $1,614.10. Materials stocks within the S&P/TSX composite index were the hardest hit, falling 2.7 per cent. Barrick Gold Corp. fell 3.2 per cent.
Energy stocks also fell sharply after crude oil fell to $101.47 a barrel, down $2.54. Suncor Energy Inc. fell 4.5 per cent.
Among U.S. stocks, Bank of America Corp. fell 3.1 per cent, Alcoa Inc. fell 2.5 per cent and Microsoft Corp. fell 2.3 per cent.
David Berman