Margin calls, a realy bad sign, drives down market

North American stocks fell on Thursday at midday amid more concerns about blow-ups, writedowns and margin calls, unsettling a market that is already operating with frayed nerves.

The Dow Jones industrial average fell to 12,124, down 130 points or 1.1 per cent. The broader S&P 500 fell to 1316, down 18 points or 1.3 per cent. Both indexes are once again approaching their low-closes in January, a trough that many observers had hoped (and perhaps still do) would serve as a benchmark for a sustained rebound among equities.

Thornburg Mortgage and Carlyle Capital Corp. both missed margin calls, leading to concerns that credit-driven market mayhem is entering a new phase of rippling defaults. The downturn was widespread, with about 90 per cent of the stocks in the S&P 500 down, led by General Electric Co., Exxon Mobil Corp., JPMorgan Chase & Co. and American International Group Inc.

The S&P/TSX composite index is still well above its January low-point, thanks to the spectacular surge in commodity prices, but the trend is not looking favourable. The benchmark index fell to 13,454, down 150 points or 1.1 per cent.

See if you can spot a trend among the biggest drags on the index: Royal Bank of Canada fell 2.2 per cent, Barrick Gold Corp. fell 2.5 per cent, Bank of Nova Scotia fell 2.3 per cent, Toronto-Dominion Bank fell 2.1 per cent and embattled Bank of Montreal slid another 4.8 per cent.

In Europe, major indexes fell further later in the day there. The U.K.’s FTSE 100 fell 1.5 per cent and Germany’s DAX index fell 1.4 per cent.