Stocks lower on pessimism surrounding talks aimed at averting fiscal cliff

TORONTO – The Toronto stock market was lower Thursday after a top U.S. lawmaker delivered a pessimistic assessment of talks aimed at stopping the U.S. from going over the so-called “fiscal cliff.”

The double-whammy of tax increases and spending cuts, which threaten to erode the already weak U.S. economy, is set to click in on Jan. 1 next week.

The S&P/TSX composite index was down 57.44 points to 12,313.36 with losses led by energy and financial companies while the TSX Venture Exchange gained 2.23 points to 1,187.83.

The Canadian dollar was off 0.38 of a cent to 100.5 cents U.S.

Losses on U.S. markets deepened after Senate Majority Leader Harry Reid said the government appears headed over the fiscal cliff because of a lack of progress in negotiations between Republicans who control the House of Representatives and Democrats who control the Senate and White House.

Reid said it is up to congressional Republicans to come up with a plan that both houses would pass and President Barack Obama would sign.

“At the end of the day, this prevailing will-they-or-won’t they in Washington is causing a dip,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

“But it’s tough to read too much into anything given that volumes are exceptionally low. All the players aren’t in the game so to speak.”

The Dow Jones industrials lost 133.31 points to 12,981.28 as data showed fiscal cliff worries are spreading to consumers.

The U.S. Conference Board said that its consumer confidence index fell this month to 65.1, down from 71.5 in November, the second straight decline and the lowest level since August.

The survey showed consumers were slightly more optimistic about current business conditions and hiring, but their outlook for the next six months deteriorated to its lowest level since 2011

The Nasdaq composite index fell 32.36 points to 2,957.79 and the S&P 500 index declined 14.97 points to 1,404.86.

Other data showed that the average number of Americans seeking unemployment benefits over the past month fell to the lowest level since March 2008 last week.

The U.S. Labour Department said Thursday that weekly applications dropped 12,000 to a seasonally adjusted 350,000 in the week ended Dec. 22. The four-week average, a less volatile measure, fell to a nearly five-year low of 356,750.

On the Toronto market, financials lost about one per cent as Sun Life Financial (TSX:SLF) lost 48 cents to $26.13. TD Bank (TSX:TD) declined $1.20 to $82.79.

Commodities were mixed with the February crude oil contract on the New York Mercantile Exchange down 24 cents to US$90.74 a barrel. The energy sector lost 0.65 per cent while Canadian Natural Resources (TSX:CNQ) fell 51 cents to C$28.38 and Athabasca Oil (TSX:ATH) slipped 13 cents to $10.48.

A major TSX loser was Poseidon Concepts Corp. (TSX:PSN) which plunged more than 50 per cent after the oilfield service company suspended its dividend, replaced its CEO and initiated a board review of the management and business processes. Poseidon shares were down $1.80 or 54.38 per cent at $1.51 after the company said it has established a special committee of the board to review the recent write-off of certain accounts owing to it.

The gold sector led advancers, up about two per cent with February bullion up $3 to US$1,663.70 an ounce. Barrick Gold Corp. (TSX:ABX) was ahead 84 cents to C$34.35 while Goldcorp Inc. (TSX:G) advanced 61 cents to $36.13.

The tech sector provided lift with Research In Motion Ltd. (TSX:RIM) up $1.04 or 9.9 per cent to $11.54, mirroring an 11 per cent gain on U.S. markets on Wednesday. RIM stock plunged about 25 per cent last week as analysts raised concerns about less revenue from the lucrative service fees charged by the company to use its secure network. The stock had been on a roll during December on rising optimism about the new BlackBerry 10 lineup which is being launched at the end of January.

Support also came from the base metals sector with March copper unchanged at US$3.60 a pound after rising five cents Wednesday. The gain, the largest in four weeks, came after workers rejected a wage proposal at BHP Billiton’s Escondida mine in Chile. Turquoise Hill Resources (TSX:TRQ) gained 19 cents to $7.24.

Elsewhere on the corporate front, Bombardier Aerospace has received a new order for six Learjet 75 business jets. Bombardier shares inched a penny lower to $3.74.