TORONTO - Stock markets tumbled mid-afternoon on disappointment with U.S. Treasury Secretary Timothy Geithner's plan to help the financial sector.
Investors showed little reaction to the Senate's approval of its US$838-billion economic stimulus package. The bill must now be reconciled with an US$819-billion version passed by the House.
Congressional leaders hope to have the bill on President Obama's desk before a recess next week.
Toronto's S&P/TSX composite index fell 150.5 points to 8,896.8, led by a 3.5 per cent drop in the financial sector.
New York's Dow Jones industrial average plunged 352.9 points to 7,918 as Geithner said the plan will greatly expand an effort to unclog credit markets that provide loans to consumers and businesses.
But analysts say there was disappointment that Geithner didn't deliver more: including a so-called bad-bank program that would remove toxic assets from bank balance sheets, proposals to modify or suspend current "mark-to-market" accounting rules to stem further bank write-downs and a large, ready-to-go program to stave off foreclosures.
"Did I really expect that Geithner was going to have a speech and the markets rally massively off this? If he had introduced some kind of measure, something the Street was totally unprepared for, maybe that was gong to happen," said Gareth Watson, associate director and Canadian equity adviser at Scotia McLeod.
But he said it would be "completely ridiculous" to expect that any corrective measures would produce immediate results.
The Canadian dollar was down 1.5 cents to 80.71 cents US -- after going as low as 80.17 cents -- as Bank of Canada governor Mark Carney reiterated to a parliamentary committee that he expects the economy to rebound in 2010, growing by 3.8 per cent.
Many economists regard this as overly optimistic, but Carney said "such a recovery is actually more muted than usual," after what will be a difficult 2009.
The TSX Venture Exchange was 4.01 points lower to 905.11.
The Nasdaq composite index declined 58.01 points to 1,533.55 while the S&P 500 index eased 38.5 points to 831.4.
Losers in TSX financial sector included TD Bank (TSX:TD), down $1.34 to $39.35 and Bank of Montreal (TSX:BMO) fell $1.36 to $30.42.
U.S. financials were sharply lower as Bank of America lost $1.24 to US$5.65 and Citigroup fell 49 cents to US$3.46. General Electric fell $1 to US$11.64.
The TSX energy sector was down three per cent as early strong gains in crude prices stalled and the March crude contract in New York lost 89 cents to US$38.67 a barrel. Petro-Canada (TSX:PCA) declined $1.32 to $28.49 and EnCana Corp. (TSX:ECA) gave back $1.49 to $56.37.
Tusk Energy Corp. (TSX:TSK) announced a deal to be taken over by a unit of Teachers Insurance and Annuity Association of America in a deal valued at $257 million. Its shares soared $1.21 or 142 per cent to $2.07.
The gold sector was the main driver on the TSX, up 2.75 per cent as the April bullion contract in New York rose $21.40 to US$914.20 an ounce. Barrick Gold Corp. (TSX:ABX) rose $1.29 to $47.11 and Goldcorp Inc. (TSX:G) climbed $1.43 to $37.52.
The base metals sector was a major weight, down 5.5 per cent with Teck Cominco Ltd. (TSX:TCK.B) down 38 cents to $5.12 and 1st Quantum Minerals (TSX:FM) slid $2.75 to US$28.25.
Shares in Inmet Mining (TSX:IMN) were off six cents to $26.55 after a fourth-quarter loss of $32.5 million on asset writedowns and low metal prices.
A Japanese consortium is paying $270 million for a 19.95 per cent interest in Uranium One Inc. (TSX:UUU). The Toronto-headquartered miner is active in Kazakhstan, the United States and South Africa and its shares climbed 14 cents to $2.15.
Investors also took in news that General Motors Corp. is slashing its global white-collar workforce by 10,000 positions and imposing salary cuts on the 63,000 non-union employees that will remain. The automaker's shares declined seven cents to US$2.76.
Data encryption specialist Certicom Corp. (TSX:CIC) says it has been told by VeriSign Inc. that the California company will not match a $3-a-share takeover offer from Research In Motion Ltd. (TSX:RIM). RIM's proposal topped a $2.10-per-share price previously agreed to between VeriSign and Certicom. Certicom shares declined 29 cents to $2.97 while RIM ticked 48 cents lower to $71.32.
Molson Coors Brewing Co. (TSX:TAP) reported a steep drop in fourth-quarter earnings to US$96.8 million "due to unfavourable foreign currency and slowing industry trends." In New York, its shares were down $3.57 at US$36.93.
Aircraft maker and defence contractor Boeing Co. lowered its previously reported fourth-quarter and 2008 results, citing lower values in its airliner financing portfolio and increased liabilities. Last month, Boeing reported a surprise fourth-quarter loss and announced plans to cut 10,000 jobs. Its shares fell $2.65 to US$40.15.
