Feb. 10, 2009 (Baystreet.ca) --
12:30 pm EST
An early rally on Bay Street turned sour by mid-Tuesday as gold prices folded and investors digested dismal earnings from car parts maker Magna International
As morning turned to afternoon, the S&P TSX Composite Index had lost any early momentum and sunk 50.55 points to 7,597.12
The overall mood was more positive on New York markets, which ran up sharply after Federal Reserve chairman Ben Bernanke told Congress the U.S. recession should end this year.
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 had a volatile morning, in negative territory early in the day as investors looked to earnings reports coming out from the big Canadian banks this week and next and worries about American banks being nationalized.
At late morning, the sector was up as TD Bank, which reports earnings Wednesday, gained 63 cents to $3.43 and Royal Bank, which releases results Thursday, was up 51 cents to $26.33.
The energy sector moved higher as oil prices advanced. EnCana Corp. advanced $1.22 to $46 on the TSX while Canadian Natural Resources was up $1.51 to $38.05.
The base metals sector was lower amid an announcement that HudBay Minerals and Lundin Mining have scrapped their friendly merger deal as HudBay shareholders threatened to vote down the agreement.
However, HudBay will keep its 19.9% ownership stake in Lundin that it acquired in December 2008 and as long as the company owns 10% or more, HudBay will be entitled to have one nominee on the Lundin board. HudBay shares jumped 62 cents to $5.40 while Lundin shares fell eight cents to 72 cents.
The gold sector fell on the TSX. Barrick Gold Corp. faded $3.72 to $40.96.
NovaGold Resources Inc. shares were down 64 cents to $3.18 after it said Monday that it lost $195.3 million in its most recent quarter, but the troubled resource company said it has secured new financing and is well positioned. This compared with a loss of $53.5 million a year ago.
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 0.31 cents to 80.29 cents U.S.
BAYSTREET
Of the 13 TSX sub-groups, nine were headed higher under the noon sun. Consumer discretionaries led the charge, ahead 2.1%, followed by energy, up 1.5% and financials, 1.2% to the good.
Gold weighed heavily on the four groups that went south, off 7.5%. Materials were next at 4.7% and real-estate stocks, down 1.3%.
The TSX Venture Exchange was off 27.07 points to 851.87 while the NASDAQ Canada index surged 8.79 points, to 403.65
ON WALLSTREET
The Dow Jones industrials index got off the deck 44.52 points to 7,159.30, after a disastrous Monday that saw a 250-point drop.
The Standard & Poor's 500 index increased 6.35 points to 749.68, while the NASDAQ composite index added 13.92 to 1,401.64.
Bernanke's congressional testimony Tuesday morning was in focus, likewise President Obama's speech to the nation this evening.
Bernanke told the Senate Banking Committee that the American economy is likely to keep shrinking in the first six months of this year. But Bernanke also said he would use all available tools to help end it later this year.
He added there were significant risks to that forecast and any economic turnaround would hinge on the success of the Fed and the Obama administration in getting credit and financial markets to operate more normally.
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.
On the economic front, 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.
American bank J.P. Morgan Chase & Co has slashed its quarterly dividend in a move that willl 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 five cents to $19.56 U.S.
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.
Bank of America's shares were 12 cents higher to $4.03 U.S. after rumours of nationalization sent its shares tumbling to a 26-year low of $2.53 U.S. last week.
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. While adjusted results topped analysts' estimates, sales dropped 17% to $14.61 billion from $17.66 billion, with same-store sales down 13% for the quarter as the company suffers under the weight of the collapsing housing market. Its shares were $1.55 higher to $20.26 U.S. in New York.
Treasury prices climbed, lowering the yield on the benchmark 10-year note to 2.70% from 2.75% Monday.
The April crude contract on the New York Mercantile Exchange gained 30 cents to $38.74 U.S. a barrel
The April bullion contract on the New York Mercantile Exchange was down $19.40 to $975.60 U.S.