Commodity stocks push TSX lower;New York indexes positive
Published Wednesday December 3rd, 2008
TORONTO - The Toronto stock market was trading near its lows for 2008 Wednesday afternoon as energy stocks lost more value, financials deteriorated and base metal stocks retreated following moves by a major copper producer to slash production.
It added up to a glum session for those contemplating corporate performance this quarter.
"You're still going to have problems with earnings coming out for the quarter, so that's going to be weighing on the markets," said Chyanne Fyckes, chief investment manager at Stone Asset Management.
New York markets were volatile with big swings in both directions as investors weighed projections of big job losses and some decent retail news.
New York markets bounced into positive territory despite projections of big job losses in the United States.
Toronto's S&P/TSX composite index fell 80.3 points to 8,247.6. The index had its lowest closing for 2008 on Nov. 21, finishing at 8,155.39.
Investors sent Research In Motion Ltd. (TSX:RIM) stock higher despite some the BlackBerry maker's announcement that its third-quarter profit will be lower than previously estimated.
.Following a negative start, RIM shares were up 89 cents to $47.37 even as it said after the market close Tuesday that it sold 300,000 fewer BlackBerrys than expected in the just-completed quarter, at 2.6 million.
It expects to report adjusted earnings of 81 to 83 cents per share for its third quarter ended Nov. 29, on revenue of US$2.75 billion to $2.78 billion. Analysts on average were expecting 90 cents per share on revenue of US$2.93 billion.
"I'm not surprised it's up right now," added Fyckes.
"Clearly this is not a company-specific problem, just a macro (economic) problem."
Meanwhile, RIM on Wednesday announced a $66-million takeover bid for data encryption specialist Certicom Corp. (TSX:CIC). Certicom shares leaped 76 per cent, gaining 65 cents to $1.50.
The Canadian dollar was down 0.55 cent to 79.29 cents US amid ongoing economic gloom and political wrangling in Ottawa.
The TSX Venture Exchange moved down 22.1 points to 709.
New York's Dow Jones industrial average moved up 66.7 points to 8,485.8.
The Nasdaq composite index climbed 17.14 points to 1,466.94 while the S&P 500 rose 6.55 points to 855.35.
Traders were pleased at news from market research firm ComScore that online retail spending came in at US$846 million, two days ago on so-called Cyber Monday, up 15 per cent from a year ago.
Shares in Amazon headed up $3.71 to US$44.90.
Meanwhile, outplacement firm Challenger Gray & Christmas said major American corporations announced 181,671 layoffs in November, led by massive cuts at banks.
The news comes two days before the release of government employment data for the U.S. and Canada.
Investors showed little reaction to the Federal Reserve's report that the nation's businesses are being hurt by tight credit conditions.
The Fed says in its beige book, which details conditions around the country, that the U.S. economy has slowed further in recent weeks as financial and credit problems took a turn for the worse. The report confirms the market's belief that difficulties in obtaining loans has choked growth in wide swaths of the economy.
The TSX energy sector fell 2.1 per cent as data showed stronger demand for oil in the U.S.
Crude inventories for last week increased by 456,000 barrels, compared to the expected increase of one million. Gasoline inventories fell 1.5 million barrels.
The TSX energy sector was down 2.7 per cent as the price of oil declined 35 cents to US$46.61 a barrel on the New York Mercantile Exchange. The dip followed Tuesday's slide of $2.32 in the near-month crude contract and touched $46.82 overnight, the lowest level since May 20, 2005.
EnCana Corp. (TSX:ECA) declined $1.31 to $52.63 and Canadian Natural Resources (TSX:CNQ) was down 96 cents to $46.30. Nexen Inc. was down $3.39 or 14.3 per cent to $20.49, on a cooling of takeover speculation that had driven the stock up nine per cent Tuesday.
The TSX financial sector was down 0.35 per cent as investors wait for earnings reports from TD Bank (TSX:TD), CIBC (TSX:CM) and National Bank (TSX:NA) Thursday and from Royal Bank (TSX:RY) Friday. Scotiabank (TSX:BNS) reported Tuesday that its fourth-quarter profit fell 67 per cent to $315 million.
National Bank (TSX:NA) gave back $1.75 to $36.64.
The base metals sector retreated more than seven per cent after American mining giant Freeport-McMoRan Copper & Gold Inc. said Wednesday it would suspend operations and lay off the bulk of its workers at a New Mexico mine, cut production estimates through 2010 and curb other costs as it struggles to cope with plummeting copper prices.
Copper prices have fallen from about $3.61 per pound at the end of September to an average of $1.69 last month. The price hit US$1.55 a pound on Wednesday.
Teck Cominco Ltd. (TSX:TCK.B) ran down 42 cents to $4.36 while Inmet Mining (TSX:IMN) gave back $2.13 to $13.12.
The gold sector was off 2.35 per cent ebruary bullion contract in New York moved down $12.80 to US$770.50 an ounce.
Goldcorp (TSX:G) faded $1.67 to $29.42.
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