TSX slides into red as Wall Street takes a drubbing on technology stocks

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TORONTO – The Toronto Stock Exchange stumbled lower in a rough trading session Monday, hurt by weakness in resource and technology stocks.

The S&P/TSX composite index moved down 122.77 points to 14,270.33.

Pulling down the TSX were lower commodity prices, while the reverberations of beaten down technology stocks on the Nasdaq added extra pressure in Canada. Traders are concerned that big technology stocks such as Yahoo and Facebook are overvalued.

On Wall Street, the Nasdaq dropped 47.98 points at 4,079.75, a decline of 1.2 per cent for the day. That was after plunging 110 points, or 2.6 per cent, on Friday.

The Dow Jones industrials slid 166.84 points to 16,245.87 and the S&P 500 index gave back 20.05 points to 1,845.04.

Nervousness has enveloped stock markets in recent sessions after last week’s optimism turned into widespread caution. The latest U.S. jobs figures on Friday showed that growth in the American economy would be a slow process, while the Federal Reserve’s stance on raising interest rates remains uncertain. Some insight may come Wednesday when the Fed releases minutes from its latest meeting in mid-March.

In commodities, the May crude contract dropped 70 cents to settle at US$100.44 a barrel, while June gold bullion was down $5.20 at US$1,298.30 an ounce. May copper climbed 1.7 cents to US$3.04 a pound.

The Canadian dollar moved ahead 0.10 of a cent to 91.17 cents US, as the Bank of Canada gave reason for optimism about the economy with its latest business sentiment survey. The quarterly survey of 100 companies showed that hiring intentions last month were among the most positive in almost two years amid higher sales and improved prospects, with an increasing number of companies reporting growth in sales over the last 12 months.

Edward Jones analyst Craig Fehr said he expected economic fundamentals to remain reasonably good in the coming months even as traders begin to reconsider which companies they invest in — perhaps one of the triggers of the recent market volatility.

“Improvement in the economy and profits will play out in the balance of the year and that should provide modest support for the equity markets,” said Fehr, the Canadian market strategist for Edward Jones in St. Louis.

“(But) When you have these extraordinary gains like we’ve had recently, investors perhaps look for some excuses in the very short term to move money or sell out.”

In corporate developments, the Potash Corporation of Saskatchewan Inc. (TSX:POT) says it will have a new president and CEO starting in July. Bill Doyle will leave his position after leading efforts to thwart an attempted takeover of Canada’s largest fertilizer producer by global mining giant BHP Billiton. Doyle will be replaced by Jochen Tilk, a 30-year mining veteran who worked as chief executive of Toronto-based Inmet Mining.

Potash shares dropped 71 cents to $37.11.

Magna International Inc. (TSX:MG) says it will spend $1.5 million on an expansion of its plant in Newmarket, Ont., and create 75 new jobs. Shares of the company fell $2.40 to $104.81.

Two European cement and construction materials producers are proposing a combination to create LafargeHolcim, which would have a combined US$44 billion in annual revenues if the proposed “merger of equals” is completed. Lafarge is Canada’s largest producer of cement and concrete building materials while Holcim, based in Switzerland, has a smaller presence in this country but extensive holdings in emerging economies.

Aluminum maker Alcoa will release its financial results on Tuesday while Canadian companies Dollarama Inc. (TSX:DOL) and Cogeco Inc. (TSX:CCA) report on Wednesday.

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