U.S. equities clobbered in the June 28-July 2 trading week

It was a slaughter for U.S. equities in the June 28-July 2 trading week as anxiety mounted about the likelihood of a double-dip recession. Further signs that economic recovery may have peaked came on July 2 with news that the U.S. economy lost 125,000 jobs in June, the biggest decline since October. The Dow Jones Industrial Average sank 457.33 points or 4.51% to close at 9,686.48, while the S&P 500 index plummeted 5.03%, losing 54.18 points to finish at 1,022.58. The Nasdaq Composite dropped 131.69 points or 5.92% to 2,091.79. Even gold failed to impress with the Philadelphia Gold and Silver index down 8.3% or 15.36 points at 169.76. The gold price slid from US$1238.60 per oz. on June 28 to US$1,211.30 per oz. on July 2.

Demonstrating the broad reach of the downturn, the top three losses came from companies in very different sectors: potash, iron ore, coal, and copper and gold. Potash Corporation of Saskatchewan fell US$9.80 per share to close at US$85.41 per share and Freeport McMoRan Copper & Gold lost US$8.03 to close at US$58.54. Cliffs Natural Resources sank US$9.48 to finish at US$46.89. Poor market sentiment outweighed the good news Cliffs received July 2, when Spider Resources entered into a support agreement for its all-cash takeover offer at C$0.19 per share. (KWG Resources failed to match Cliffs’ bid and Spider has paid it a termination fee of C$2.3 million.) Cliffs’ offer is a 138% premium over Spider’s closing share price on the TSX Venture Exchange on May 21 and values Spider at C$125 million.

Losses were also large for Seabridge Gold, one of North America’s fastest growing gold companies, which slid US$5.96 to close at US$28.84. The company has two major projects: the KSM property near Stewart, British Columbia, and the Courageous Lake gold project in Canada’s Northwest Territories. Seabridge started drilling at Courageous Lake on June 16 to upgrade inferred resources to the measured and indicated category. The project’s FAT deposit has been modeled as a large, single-pit operation with a grade in the range of 2grams gold per tonne.

On the positive side of the ledger, Commerce Group, which for the past 40 years has been exploring for precious metals in El Salvador, jumped 40% to 7¢ per share on no news, while Mountain Province Diamonds topped the week’s list of value gains with an advance of 6¢ to US$2.52, also on no news.