TORONTO - The Toronto stock market is likely in for another rocky week as traders try to assess where oil prices will end up and how the collapse in prices to 5 1/2 year lows is impacting other corporate sectors.

It's a light week for economic data but investors will start to turn their focus to corporate earnings as the fourth-quarter reporting season gets moving in the United States.

The Toronto market had a dreadful start to the 2015 trading year, with the TSX losing 369 points or 2.5 per cent.

The energy sector led losses, falling six per cent in addition to the 20 per cent plunge for all of 2014, as oil prices dropped through the US$50 a barrel level and kept on falling.

But the financial sector was the second-biggest decliner, losing almost five per cent and industrials fell more than three per cent as investors consider the fallout from plunging prices on other areas of corporate Canada and the domestic economy.

"You have analysts starting to seriously think about what impact does this have in the financials in Canada," said Andrew Pyle, senior wealth adviser and portfolio manager at ScotiaMcLeod in Peterborough, Ont.

"So if oil were to stay at these levels, for a longer period of time, like the greater part of 2015, what impact does that have on the credit quality of companies that operate in that area. At what point do the banks start to feel the pinch from this? I don’t think we have really seen it yet."

Oil prices are down more than 50 per cent since mid-June 2014, with analysts saying lower demand from weaker economies in Asia and Europe is part of the reason for the drop.

But the overwhelming reason is a massive amount of oversupply as evidenced by the 33 per cent price drop since the end of November after Saudi Arabia said any cut in production was out of the question. The oil-rich kingdom had made it quite clear it is prepared to play a waiting game that could result in high-cost producers having to drastically cut back, or even shut down.

"It is a massive game of chicken," said Pyle.

The speed of the decline has caught many off guard, making it even more difficult to see where oil could end up before recovering.

"We have violated so many technical levels on the way down," said Pyle.

"Not too long ago, September, October, a lot of analysts said $80 should probably hold here. We broke through that. Then, $70. Snapped $70 in a heartbeat and then $50 became this really important psychological floor and now that’s violated and the market in general is basically throwing up its hands and saying, 'this is ridiculous, this is a falling knife.'"

On the economic calendar, there are no major releases in Canada.

But in the U.S., investors will take in December retail sales data. Economists looked for a 0.1 per cent rise, with much cheaper gasoline prices encouraging consumer spending.

The December U.S. consumer price index and American industrial production figures for December will also come out during the week.

Aluminum company Alcoa kicks off U.S. earnings on Monday. But the report investors are waiting to see is the quarterly results from oilfield services company Schlumberger (NYSE:SLB).

"That will be the big one," said Pyle.

"This is going to be the litmus test I think for the entire earnings season in terms of what is the real impact from oil and companies that are involved in the industry. And for all the things (such as) the impact of the price, what happened with the cost side, what has happened with production. That will set the tone for that sector."

Pyle also noted that analysts will be focused on sectors that can benefit from the drop in oil prices and a Canadian dollar that has also headed to 5 1/2 year lows against the greenback.

"What about the transport companies? What about the airlines, the FedExs of the world? What about consumer stocks? I think you will find a lot of focus to see is there a big offset," he said.

"Because if such companies do really well then you may see investors say, 'there are negatives and positives and that will be key.' If we don‘t see good results out of the companies that we expect to do well in this environment, then that‘s where the market environment could turn sour."

News from © The Canadian Press, 2015