Stocks break losing streak

Feb. 10, 2009 (Baystreet.ca) --

04:41 pm EST North American stock markets clawed back onto positive ground this afternoon after U.S. Federal Reserve chairman Ben Bernanke said "there is a reasonable prospect" the recession will end this year.

The S&P TSX Composite Index came back from a negative position in the afternoon, charging ahead 210.67 points to 7,858.34

On the earnings front, Magna International shares were down 30 cents to $31.85 in Toronto after the auto parts giant reported a net loss of $148 million U.S. in the fourth quarter of 2008, reversing a year-earlier profit of $28 million. It expects 2009 to be worse for the auto industry, even with government bailout packages to the automakers.

The TSX financial sector gained by the afternoon after a dip into the red during the morning because of ongoing worries about American banks being nationalized.

TD Bank, which reports earnings Wednesday, gained $1.12 to $33.92 and Royal Bank, which releases results Thursday, was up $1.48 to $27.30.

The energy sector moved higher as oil prices advanced. EnCana Corp. moved up $1.60 to $46.38 while Canadian Natural Resources was up $2.61 to $39.15.

The base metals sector was up amid an announcement that HudBay Minerals and Lundin Mining have scrapped their friendly merger deal, although HudBay will keep its 19.9% ownership stake in Lundin. HudBay shares jumped 61 cents to $5.39 while Lundin shares fell nine cents to 71 cents.

The gold sector fell, as Barrick Gold Corp. faded $4.41 to $40.27.

On the earnings front, Magna International shares were up $2.19 to $34.34 in Toronto after the auto parts giant reported a net loss of $148 million U.S. in the fourth quarter, reversing a year-earlier profit of $28 million. It expects 2009 to be worse for the auto industry.

Maple Leaf Foods Inc reported a smaller fourth-quarter loss on Tuesday, hurt by the lingering effects of a costly recall of tainted meat. The company, one of Canada's largest food processors, said its loss narrowed to $14.6 million, or 12 cents a share, from $22.1 million, or 17 cents a share, a year earlier.

Thomson Reuters Corp., the financial news and data provider created by a merger last year, said fourth-quarter profit gained 51% after the combination.

Net income rose to $657 million U.S., or 79 cents U.S. a share, from $434 million U.S., or 67 cents U.S., in the year-ago period, New York-based Thomson said today in a statement. Thomson Corp. bought Reuters Group Plc for $15.9 billion in April.

The Canadian dollar advanced 0.54 cents to 80.52 cents U.S.

BAYSTREET Of the 13 TSX sub-groups, 11 enjoyed an "up" day, led by a 6.9% surge by the financials group, a 5.1% rally by energy stocks, while utilities grew 3.9% on the day.

The two losing groups were gold, off 8.8% and materials, down 5%

The TSX Venture Exchange was off 25.35 points to 853.59 while the NASDAQ Canada index surged 22.16 points, to 417.02

ON WALLSTREET

The Dow Jones industrials index arose, took up its bed, and walked - then ran, gaining 236.16 points from Monday's near-12-year low, to end Tuesday at 7,350.94.

The Standard & Poor's 500 index recovered from a decade-plus gulch of its own, picking up 29.80 points to 773.13, while the tech-laden NASDAQ composite index added 54.11 to 1,441.83.

Bernanke told the Senate Banking Committee that the American economy is likely to keep shrinking in the first six months of this year. But he also said he would use all available tools to help end the economic slide later this year.

He added that any turnaround will hinge on the success of the Fed and the Obama administration in getting credit and financial markets to operate more normally.

Bernanke's assessment helped take the sting out of some dismal economic data.

The New York-based Conference Board said that its Consumer Confidence Index, which was down slightly in January, plummeted more than 12 points in February to 25, from the revised 37.4 last month. That was well below the 35.5 level that economists expected and broke new lows since the index began in 1967. A year ago, the consumer confidence reading stood at 76.4.

There were more dismal U.S. housing data to consider as the widely watched Standard & Poor's/Case-Shiller U.S. National Home Price Index tumbled by the sharpest annual rate on record in the fourth quarter and in December. The index plunged 18.2% during the quarter from the same period a year ago.

President Obama addresses both houses of Congress, with the economy being the major topic. He will laud legislators for passing the $787-billion U.S. stimulus plan, exhort them on legislation aimed at fixing the housing crisis, and talk about cutting the deficit in half by the end of his current term.

In corporate news, American bank J.P. Morgan Chase & Co has slashed its quarterly dividend in a move that will save it around $5 billion U.S. a year and added that its first quarter has been "solidly profitable" so far. The firm cut its quarterly payout to five cents a share from 38 cents but its shares rose 7%.

Bank of America Corp. chief executive Ken Lewis reassured employees in a memo Monday that his company is not in discussions for the U.S. government to take a larger stake in the bank.

Citigroup was up 11% to $2.39 U.S., and Bank of America was up 20% to $4.67 U.S. The two banking behemoths that have been under siege in recent sessions on fears that a nationalization of the U.S. banking system may leave shareholders with little.

Home Depot Inc., America's largest home improvement retailer, reported a fiscal fourth-quarter loss of $54 million U.S. Tuesday mostly due to its plan to shut its four smaller home-improvement brands. Its shares were $1.97, or 10%, higher to $20.68 U.S. in New York.

Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.76% from 2.75% Monday. Treasury prices and yields move in opposite directions.

The April crude contract on the New York Mercantile Exchange gained 76 cents to $39.20 U.S. a barrel

The April bullion contract was down $25.50 to $969.50 U.S. an ounce.