World financial news

For the chief executive officer of AT&T, the largest U.S. wireless company, it just isn’t a big deal that American homeowners are getting their phone lines and high-speed Internet disconnected for non-payment in increasing numbers these days. Randall Stephenson told a conference in Phoenix, Ariz., on Tuesday that the home phone and Internet business only accounts for 20 per cent of his revenue anyway. With nearly 66 million wireless subscribers, he expects double-digit earnings growth this year and next.

The market took it a little differently.

Within minutes of Stephenson’s comments about cutting phone service to U.S. homeowners, AT&T shares dropped $4.50, or 10 per cent, to $37.14, recovering to end the session down five per cent at $39.16.

The rest of the U.S. market was not nearly as resilient. After a pleasant morning of trading where the Dow Jones Industrial Average was up 78.93 points at one point, the benchmark plunged 268 points, finishing lower by 238.42, or 1.9 per cent, at 12,589.07. The S&P 500 dropped 25.99, or 1.8 per cent, to 1,390.19, while the Nasdaq composite skidded 58.95, or 2.4 per cent, to 2,440.51. Phone companies in the S&P 500 lost 4.8 per cent of their value, the steepest one-day drop in five years. Verizon, the number-two U.S. phone company, fell 93 cents to $41.99 US.

Homebuilders, mortgage lenders and bond insurers took another big drop after the U.S. realtors association said sales of previously occupied homes dropped 2.6 per cent in November from a year earlier. KB Home fell 9.2 per cent to $16.78 US after writing off big losses in the third quarter. rel=”external nofollow”Lennar dropped 7.3 per cent to $14.62 US. Countrywide, the biggest U.S. mortgage lender, sank $2.17, or 28 per cent, to $5.47, the most since Black Monday in 1987, after denying reports that a bankruptcy filing is imminent pay day advance. MGIC, the biggest mortgage bond insurer, dropped 15 per cent to $16.51. Credit card issuer Capital One fell eight per cent to $43.19 US.

Canadian markets weathered the sell-off better, as U.S. dollar weakness pushed gold to a new record high while other commodities rallied. The S&P/TSX Composite Index finished the session lower by 77.12 points, or 0.6 per cent, at 13,541.75, after rising as much as 152 points earlier in the session. The S&P/TSX Venture composite gained 0.23 of a point to 2,820.21.

The February gold contract reached $884 US an ounce, surpassing the all-time record of $875 US set in January, 1980, before ending the session at $880.30 US, up $18.30, or 2.1 per cent. The February crude oil contract climbed $1.24 to $96.33 a barrel. The Canadian dollar climbed half a cent to finish just under $1 US.

Goldcorp added 73 cents to $38.05, up two per cent. Barrick gained $1.98, or four per cent, to $49.46, a new high. Yamana advanced $1.13, or eight per cent, to $15.50. Alamos Gold added 82 cents, or 14 per cent, to $6.57, after production rose 43 per cent in the third quarter to 31,000 ounces.

Richmond-based CHC Helicopter fell $1.36, or five per cent, to $23.58. Moody’s bond-rating service cut CHC’s credit outlook to “negative” after the company borrowed to add 43 new choppers to its fleet. CHC is the world’s biggest transport provider to offshore oil-drilling platforms. After markets closed, Richmond’s MacDonald Dettwiler announced the sale of its satellite-related defence business to Alliant Techsystems of Minnesota for $1.325 billion, or $32 a share. Shares of MacDonald Dettwiler last traded at $42.51, well off its 52-week high of $53.82.

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