News Column

Gold weighs on Toronto market

January 21, 2014

Bombardier layoffs in focus The Toronto stock market was moving away Tuesday from heights not seen in nearly three years as it felt the impact of a fall in gold prices as well as declines in the metals and mining and materials sectors. The S&P/TSX composite index stumbled 38.52 points to finish Tuesday at 13,951.77 The Canadian dollar descended 0.22 cents , to 91.14 cents U.S., a day before the Bank of Canada makes its next announcement on interest rates. On the TSX, the gold sector was off as Barrick Gold declined 48 cents or 2.2% to $21.08 . In corporate news, shares in Bombardier Inc. fell after the company announced that it plans to lay off 1,700 workers from its aerospace division, mostly around Montreal . The cuts represent 6% of the Bombardier Aerospace workforce. Its shares fell 16 cents to $3.95 . Elsewhere on the TSX, the health-care sector took the largest losses, weighed mostly by Valeant Pharmaceuticals, $3.16 , or 2.1%, to $150.09 . The materials sector was down as shares in Agrium declined 1.3%, or $1.34 , to $103.03 a share. The fertilizer producer issued new guidance for its fourth-quarter earnings on Monday, saying that it expects them to be at the "bottom" of previous estimates. It had said earlier it expected earnings to be between 80 cents U.S. to $1.25 U.S. per diluted shares. Agrium said its updated guidance was primarily due to lower than expected selling prices across all wholesale nutrients in the quarter and lower than expected urea ammonium nitrate and domestic potash sales volumes, partly due to problems with rail shipments. The metals and mining sector took back some ground with March copper ahead a penny at $3.35 U.S. a pound. On the Canadian economic calendar, manufacturing sales stayed hot, jumping 1.0% in November to $50.5 billion , their sixth advance in seven months. Wholesale sales were unchanged in November at $50.4 billion . ON BAYSTREET The TSX Venture Exchange poked higher by 0.19 points to end Tuesday at 979.96. All but four of the 14 Toronto subgroups were lower by the closing bell, weighed by the health-care sector, down 1.5%, materials, sliding 0.9% and the metals and mining group, off 0.6%. The four gainers were led by information technology, edging up 0.1%, energy, picking up a mere 0.02%, and utilities, nosing up 0.01%. ON WALLSTREET Stocks were trying to recover from early losses Tuesday, as investors looked past better-than-expected earnings from three blue chip companies. The Dow Jones Industrial Average slipped 44.12 points to close at 16,414.44, held back by decreases in the shares of Verizon, Travelers and Johnson & Johnson The S&P 500 index improved 5.10 points, however, to 1,843.80. The NASDAQ gained 28.18 points to 4,225.76. Markets were shuttered Monday in the U.S. for Martin Luther King Day . BlackBerry surged amid ongoing hopes the smartphone maker's new CEO John Chen will turn the company around. Stocks have been off to a rocky start in 2014. After last year's big rally, investors are looking for signs the economy will be strong enough to keep the bull market going. But with little economic data on the agenda this week, investors are turning their attention to the latest quarterly reports from big U.S. corporations. Johnson & Johnson reported quarterly results that topped expectations, but shares fell on the company's cautious outlook for 2014. Earnings at Verizon were also better than expected, while revenue growth was in line. Travelers reported strong earnings thanks to lower catastrophe losses. IBM will report its results after the closing bell. A spate of company earnings will follow later this week from heavyweights such as Microsoft and Netflix. Delta shares gained after the airline's earnings came in above forecasts. Shares of Halliburton fell despite better-than-expected results. Expedia shares fell on reports the online travel company has lost 25% of its "search visibility" on the web. Dow Chemical shares jumped after activist investor Dan Loeb's Third Point Capital announced a "significant" stake in the company. Loeb wants Dow to spin off its petrochemicals business, which he thinks should be cashing in on the U.S. shale gas boom. Under Armour shares jumped after the sports apparel maker announced a 10-year contract as the exclusive outfitter of the University of Notre Dame's 26 varsity teams. Overall, earnings are expected to be up 5.9% in the fourth quarter for the companies in the S&P 500, according to FactSet Research. A few weeks ago, the forecast was for earnings growth of 6.3%, but the estimate was revised lower this week due to disappointing reports, including lower profits in the energy sector. Prices for 10-year U.S. Treasuries were up, lowering yields to 2.82% from Friday's 2.83%. Treasury prices and yields move in opposite directions. Oil prices remained positive 51 cents to $94.88 U.S. a barrel. Gold prices docked $9.70 to $1,242.20 U.S. an ounce.

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Source: Baystreet Stock Market Update (Canada)

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