TORONTO - Investors continued to rein in their optimism on Wednesday, and sent the Toronto stock market lower, driven by weaker oil prices and a renewed sense of caution about the economic recovery.

The S&P/TSX composite index moved back 115.21 points to close at 10,455.33, making it the second consecutive session of triple-digit losses for the TSX. The main index fell 187 points on Tuesday.

The pullback suggested investors aren't convinced that the economy won't experience more turbulence in the short term.

The Canadian dollar closed at 91.68 cents U.S., down 0.65 of a cent.

On the TSX, the energy sector backed off 2.8 per cent as a weekly report from the U.S. Energy Department showed that inventories rose more than expected last week. The light, sweet crude for September delivery fell $3.88 to US$63.35 a barrel on the New York Mercantile Exchange.

The lower price of commodities has been having a negative impact on the results of several Canadian companies.

Talisman Energy Inc. (TSX:TLM) said profits plunged 85 per cent, and its shares lost five per cent to $16.27 after the earnings report.

Metals stocks were the biggest decliner, down 3.6 per cent.

Sherritt International Corp. (TSX:S), a miner, coal producer and power producer, said its profits dropped to $24.4 million, from $80.3 million a year earlier, on weaker commodity prices. Shares backed of nearly three per cent to $6.03.

The TSX Venture Exchange ended 3.63 points higher to 1,131.74.

On Wall Street, the Dow Jones industrials were down 26 points to 9,070.72.

The Nasdaq composite dipped 7.75 points to 1,967.76 while the S&P 500 index gave back 4.47 points to 975.15.

Bill Harris of Avenue Investment Management said the downturn over the past two days is largely tied to U.S. housing numbers released Tuesday.

The S&P/Case-Shiller Home Price index indicated that home prices posted their first monthly increase since the summer of 2006, giving the markets some hope that a recovery is developing.

Harris said that is "unbelievably important" to Canada because it's the first sign that the U.S. Federal Reserve might consider increasing interest rates, which would send the U.S. dollar higher.

"There's a risk they may actually tackle inflation," he said.

"For Canada, it takes the excitement out, because you might be attacking the inflationary pressure ahead of what everybody expected."

He said that's having an impact on gold stocks in the short term, and contributing to the downturn in resource stocks. The price of gold for the August delivery closed down $11.90 to $927.20 on the Nymex.

Meanwhile, the U.S. Commerce Department said orders to U.S. factories for big-ticket manufactured goods dropped an unexpectedly steep 2.5 per cent in June, the largest drop in five months. Economists were expecting a drop of 0.6 per cent.

In Canada, units of Jazz Air Income Fund (TSX: JAZ.UN) dropped nearly six per cent to $3.45 after the regional carrier said it would cut its cash distributions to unitholders Tuesday as it announced a new cost-cutting agreement with Air Canada (TSX:AC.B).

Shares of Enbridge Inc. (TSX:ENB) gained 22 cents to close at $39.72 after announcing plans for a US$500-million expansion to its offshore pipeline network in the Gulf of Mexico.

In earnings, TMX Group Inc. (TSX:X), operator of the TSX and Montreal stock exchange, reported a weaker $46.9 million profit in the second quarter despite a six per cent increase in revenue. Its stock weakened $1.65 to $33.55.

Shares of Maple Leaf Foods Inc. (TSX:MFI) moved ahead five per cent to $9.41 after the company reported second-quarter profits of $4.9 million, reversing a year-earlier losses of $9.4 million. However, sales declined 2.5 per cent to $1.3 billion from $1.4 billion booked the year before.

Torstar Corp. (TSX:TS.B), one of Canada's largest newspaper publishers, reported a net loss of $4.4 million for the second quarter on a tax charge and weaker advertising revenues. Stock in the company rose three cents to $5.06.

Meanwhile, U.S.-based media conglomerate Time Warner Inc. said its second-quarter profit fell 34 per cent on lower revenue in the company's publishing, movie and online properties. Its earnings topped estimates but revenue fell short of projections.

Sprint Nextel Corp., the third-largest wireless provider in the U.S., said its loss widened in the second quarter as revenue and subscribers continued to decline.