TSX adds to losses amid Fed tapering concerns

The Toronto stock market was lower for a second day as a U.S. budget deal and a solid retail sales report fuelled expectations that the U.S. Federal Reserve could start cutting back on its monetary stimulus program as early as next week.Further drops in mining stocks heped push the S&P/TSX composite index down 51.65 points to 13,081.77 after tumbling 191 points.The Canadian dollar declined 0.35 of a cent to 94.05 cents US as a stronger than expected retail sales report boosted the greenback.U.S. indexes also fell after the Commerce Department said that retail sales rose 0.7 per cent in November, the biggest gain in five months and a better showing than the 0.6 per cent rise that economists had expected. October’s figure was also revised higher to 0.6 per cent from 0.4 per cent.The Dow Jones industrials were down 90.19 points to 15,753.34, the Nasdaq fell 5.22 points to 3,998.59 and the S&P 500 index gave back 5.63 points to 1,776.59.A budget deal in the U.S. Congress raised concerns that the Fed is set to start tapering its US$85 billion of monthly bond purchases.Analysts believe the prospect of a shutdown over budget wrangling, along with difficulties in extending the debt ceiling, helped persuade the Fed to postpone tapering in September. The 16-day shutdown in October crimped economic growth and hurt consumer confidence.The prospect of Fed tapering has hung over markets since May when outgoing Fed chairman Ben Bernanke first raised the prospect of cutting back on asset purchases, if economic conditions allowed.Those bond purchases have kept long-term rates low, persuaded investors to put their money in the stock market and supported a strong rally on many markets this year.Fed tapering concerns also continued to punish bullion prices as February gold fell $31.90 to US$1,225.30 an ounce.Bullion prices have also been depressed amid low inflation in many countries and an improving global economy, falling about 25 per cent this year. Gold stocks have done much worse, with the TSX Global Gold sector down about 50 per cent for the year.That sector was down a further 2.3 per cent Thursday morning with Kinross Gold (TSX:K) down five cents to C$4.80.Iamgold Corp. (TSX:IMG) said that it is suspending its dividend effective immediately, citing the need to preserve cash in the face of falling prices for bullion and its stock fell 31 cents or 7.6 per cent to $3.76.The base metals sector lost 1.8 per cent while March copper was unchanged at US$3.29 a pound. Teck Resources (TSX:TCK.B) fell 48 cents to $24.19.The interest-rate sensitive utilities sector was also a major source of weakness, down 2.3 per cent. The sector has been weakening for months as Fed tapering talk has pushed bond yields higher. On Thursday, the benchmark U.S. 10-year Treasury yielded 2.85 per cent, up sharply from about 1.6 per cent at the end of April.Canadian utility Fortis is buying power provider UNS Energy Corp. for $2.5 billion, expanding its business into Arizona. Fortis will also assume $1.8 billion in debt. UNS Energy, which is headquartered in Tucson, Ariz., provides electricity and natural gas services to more than 650,000 customers in the state through its two subsidiaries. Fortis shares fell $1.53 to $29.66.Financials were also weak with Scotiabank (TSX:BNS) down 41 cents to $62.77.The energy sector was up 0.3 per cent as January crude on the New York Mercantile Exchange gained 25 cents to US$97.69 a barrel.In other corporate news, shares in yoga clothing retailer Lululemon Athletica (Nasdaq:LULU) fell 10.6 per cent to US$61.11 in New York after the Vancouver-based company beat estimates for profit and revenue but it said it expects flat same store sales in the crucial fourth quarter.Air Canada (TSX:AC.B) is buying 61 Boeing 737s as it replaces its older Airbus and Embraer narrow body aircraft. The deal has a face value of about US$6.5 billion. Air Canada says it could expand the order to as many as 109 of Boeing’s 737 MAX planes as it replaces its older Airbus and Embraer narrow body aircraft. Air Canada stock slipped four cents to $7.64.American Airlines has signed a firm deal to purchase 30 of Bombardier’s (TSX:BBD.B) CRJ900 NextGen aircraft and options for 40 more planes. The value of the contract is about US$1.42 billion at list prices but could rise to US$3.38 billion if the options are converted into firm orders. Bombardier was off four cents to $7.64.