TORONTO -- The Toronto stock market turned slightly lower Wednesday afternoon as energy shares and oil prices retreated and investors sold off transportation giant Bombardier (TSX:BBD.B) amid a big writedown.
The S&P/TSX composite index slipped 9.24 points to 14,075.19, with support coming from resource stocks, which turned positive after a string of sell-offs.
Bombardier was a major drag on the TSX as its stock tumbled 87 cents or 21 per cent to $3.27 on a very heavy volume of 55 million shares as it announced it will write down the value of its Learjet 85 program, resulting in a pretax charge of about US$1.4 billion in its fourth quarter. Bombardier is cutting about 1,000 employees in Mexico and the United States due to weak demand for the business jet.
Analysts said markets were also alarmed by the fact that cash flow from the aerospace division is expected to be only US$800 million, down from an estimate of between US$1.2 billion and US$$1.6 billion in its prior forecast. Markets were already jittery over delays associated with its much anticipated CSeries jet.
"To me, that was a real telling point," said Ian Nakamoto, director of research at 3MACS.
"When you cut it by that amount, they may have to come back to the market, you never know. That's part of it. When you have cash flow, you can develop various products and services. With less cash flow, you develop less."
Also, Target Corp. (NYSE:TGT) announced Wednesday morning that it is exiting its Canadian business and will record about US$5.4 billion in pre-tax losses in its fourth-quarter. Its shares gained two per cent to US$75.85. Target has 133 stores and 17,600 employees across Canada.
On the TSX, Canadian Tire (TSX:CTC.A) seemed to be a beneficiary from the Target announcement with its shares ahead $2.84 to $119.08.
BlackBerry (TSX:BB) (Nasdaq:BBRY) fell $2.96 or 19.7 per cent to $12.06 on the TSX after the device maker and smartphone company Samsung poured cold water on a report that Samsung wants to make a $7.5-billion takeover offer for the struggling Canadian company. BlackBerry had surged 29 per cent late Wednesday after Reuters reported that Samsung has recently made overtures to buy BlackBerry.
It was a volatile morning on financial markets after the Swiss central bank surprised markets by scrapping a policy that limited how much the euro could fall against the Swiss franc.
The Canadian dollar was caught up in the ensuing gyrations on markets, up 0.03 of a cent to 83.75 cents US after going as high as 84.65 cents US.
New York indexes were lower amid a weak earnings report from Bank of America as the Dow Jones industrials declined 69.93 points to 17,357.16, the Nasdaq was down 55.1 points to 4,584.22 and the S&P 500 index slipped 12.69 points to 1,998.58.
Bank of America posted earnings per share of 25 cents a share, six cents short of expectations. Revenue fell 12.6 per cent to US$18.96 billion, missing forecasts calling for $21.08 billion and its shares fell 4.5 per cent to $15.30.
The TSX gold sector was the major advancer, ahead 7.6 per cent as February bullion gained $30.30 to a four-month high of US$1,268.80 an ounce.
The metals and mining sector was up 0.45 per cent after plunging the previous two sessions. Copper prices revived somewhat after plunging 14 cents a pound Wednesday in the wake of a weak U.S. retail sales report and a downward revision to global economic growth by the World Bank. The March copper contract was up five cents to US$2.56 a pound.
The energy sector shed early advances and was down slightly as oil prices turned lower with the February contract down $1.73 to US$46.75 a barrel, giving back a big chunk of Wednesday's advance of $2.59 a barrel after the Federal Reserve said in its latest regional survey that the U.S. economy was growing at a moderate pace in December and early January.
