Stocks pull back

Mar. 27, 2009 (Baystreet.ca) --

01:00 pm EST The Toronto stock market was down by Friday noon with most sectors negative as the March rally took another pause.

New York markets also moved lower. Data showing higher American consumer spending for a second straight month but dropping personal incomes prompted traders to nibble at profits at the end of another week of advances.

The S&P/TSX Composite Index remained 96.83 points in the red at noon, at 8,898.67, off its lows for the day. That still left the main index above where it started the year, and up 19% since the market's rally took off March 10.

Canadian investors digested plans by the Ontario government to give businesses $4.5 billion in tax cuts over three years. The provincial corporate income tax rate is to drop to 10% by 2013 from the current 14.

The TSX energy sector weakened as EnCana Corp. surrendered $1.36 to $53.32 and Suncor Inc. declined 49 cents to $29.41.

The Toronto financial group fell. Manulife Financial pulled back 40 cents to $15 and Royal Bank slipped 42 cents to $37.06.

The gold sector declined as Barrick Gold Corp. faded 72 cents to $40.06.

Agrium Inc. is raising its bid for CF Industries Holdings Inc. to $4.2 billion U.S., about 20% above the original offer. Agrium shares lost 82 cents to $48.16.

Magellan Aerospace descended one cent to 34 cents after it said it may be unable to continue as a going concern despite erasing losses. Magellan needs to renew a credit facility and win an extension on a $50-million loan to stay aloft.

Shares in yoga-wear retailer Lululemon Athletica Inc. surged for a second day although same-store sales sagged 8% in the fourth quarter compared to a year earlier and are expected to decline further.

Quarterly profit fell to $10.9 million from to $14.6 million but Lululemon shares rose $1.37 to $10.77 after running up $1.26 Thursday before the earnings report.

The Canadian dollar tumbled 0.47 cents to 80.78 cents U.S.

ON BAYSTREET

Of the 13 TSX subgroups, all but two were negative. Gold stocks were 2.1% less shiny, energy stocks suffered 1.9%, and consumer discretionaries, off 1.5%

Metals and mining were up 0.5%, to lead the two gaining groups, though financials were fairly flat, picking up less than 0.1%.

The TSX Venture Exchange fell back 3.06 points to 970.96 while the Nasdaq Canada Index picked up 5.84 to 469.07

ON WALLSTREET

The Dow Jones Industrials average had recovered a bit by noon, but was still in negative country, 86.10 points, to 7,838.46.

The S&P 500 index had lost 8.17 points to 824.69, while the Nasdaq subtracted 17.94 points to 1,569.06

The U.S. Commerce Department reported that consumer spending edged up 0.2% in February, in line with expectations. That follows a one per cent jump in January, upwardly revised from the 0.6% rise originally reported.

But the report also said incomes fell 0.2% in February, the fourth drop in five months, reflecting massive job cuts.

A sizable pullback would not necessarily derail the market's upswing, said Peter Cardillo, market economist at brokerage Avalon Partners in New York. He regards himself as fully invested, and "even if we were to drop 3% to 4%, it wouldn't worry me."

Google said late Thursday that it was cutting just under 200 sales and marketing positions worldwide. It is the second round of layoffs in Google history.

General Motors shares rallied on published reports that the government could extend the automaker's restructuring deadline, giving it more time to gain concessions from unions and qualify for more taxpayer help.

The Wall Street Journal said that the government could extend the March 31 deadline by 30 days. On Thursday, GM said that 12% of its U.S. workforce has taken its latest buyout offer. However, the company is still looking to work with the union to alter retiree health care benefits, among other things.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.72% from 2.73% Thursday. Treasury prices and yields move in opposite directions.

The May crude contract on the New York Mercantile Exchange fell $2.32 to $52.02 U.S. a barrel.

The April bullion contract in New York dropped $16.30 to $923.70 U.S. an ounce.