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DOW, S&P, NASDAQ Retreat On Loan Worries; TSX down As Commodities correct

|Includes: AAPL, Bank of America Corporation (BAC), LDK, MTG, SVU, TK

US stocks posted losses as banks may be forced to buy mortgage loans.  An unexpected decision from China’s central bank to increase interest rates may have also contributed to the decline. 

For the first time since 2007, People's Bank of China raised the one-year interest rate to 5.56% from 5.31%. 

Inflation data for China will be released on Thursday, which is expected to show an increase of 3.6%, according to economists surveyed by Bloomberg.

In the U.S., housing starts increased for the third consecutive month.   Housing starts for September came in at 610,000, beating the expected 580,000.  The number represents a 4.1% increase from the year-ago period and a more modest 0.3% on a quarter-to-quarter basis.

Bank of America (NYSE:BAC) lost almost 5% after it was reported that it may be forced by investors to buy back loans that were packaged into bonds.  Other banks were also in the red on concerns that the problem may be widespread.

Apple (NASDAQ:AAPL) fell almost 3% after fourth quarter sales missed analyst estimates.

Other large decliners of the day include LDK Solar(NYSE:LDK), SUPERVALU (NYSE:SVU) and Finisar(NASDAQ:FNS), which plunged 14.5%, 14.6%, and 11.3%, respectively.

Rare earth elements producer Molycorp (NYSE:MCP) rallied 10% after the Chinese Ministry of Commerce stated that their rare earth element reserves may last only 15-20 years at current production rates.  

MGIC Investment (NYSE:MTG)  jumped 7% after the mortgage insurer posted a smaller loss than expected for the third quarter. 

Crude oil transporter Teekay (NYSE:TK)  managed to gain 6% despite oil price declines.

The S&P 500 and Dow indexes lost roughly 1.6% and 1.5%, respectively, while the NASDAQ lost 1.8%.


Crude oil futures dropped by almost 4% to trade at $81.13 per barrel.  Gold and copper futures slipped by roughly 3% while silver futures lost 3.5%. 

Canadian markets

The S&P/TSX index lost 0.9% to trade at 12,555.

Four of eight Canadian sector indices posted losses.  The metals and mining sector dropped the most, declining by 3.5%.

Large gainers include Canadian Tire (TSX:CTC), SXC Health Solutions (TSX: SXC), Fortis(TSX: :FTS), and CAE (TSX:CAE), which rose 4%, 2.7%, 2.3%, and 2.2%, respectively.

Mining companies were the biggest percentage losers given the weakness in metal prices.  Silver Standard Resources (TSX:SSO) and Osisko (TSX: OSK) posted losses of roughly 7% each.  Silvercorp Metals (TSX:SVM) also dropped by 7%.

Disclosure: No Positions