News Column

Stocks rally despite deals, earnings

February 13, 2014



Manulife, Telus in focus







The Toronto stock market surged amid a mixed slate of earnings reports from the insurance, retail manufacturing and resource sectors.

The S&P/TSX composite index recovered 62.93 points from a lower open to pause for lunch at 13,963.42

The Canadian dollar gained 0.14 cents to 91.03 cents U.S.

On the earnings front, Manulife Financial Corp. says it had $685 million or 35 cents a share of core earnings in the fourth quarter, three cents short of expectations, and its shares fell 26 cents to $20.65.

Telus Corp. posted $301 million or 49 cents of quarterly adjusted net income, up 12.7 per cent from a year earlier. The results beat expectations by a penny and its shares rose 47 cents to $37.53.

The gold sector rose as Barrick Gold Corp. lost $2.83 billion U.S. in its latest quarter as the gold miner slashed it reserve estimates and said it expected production this year to fall from 2013. It beat on revenue expectations and its shares gained 69 cents to $21.50.

The consumer discretion sector also helped lift the TSX as Canadian Tire Corp. earned quarterly net income of $191 million or $2.35 a share, up from $162.8 million a year earlier. Revenue was $3.328 billion, compared with $3.166 billion and its shares gained $2.95 to $97.70.

The base metals sector declined as March copper dipped three cents to $3.22 U.S. a pound. Teck Resources blamed lower prices for a lower adjusted fourth-quarter profit of $227 million, or 40 cents a share. Teck shares fell $1.61 or 5.8% to $26.25.

The industrials sector fell and Bombardier Inc. tumbled 42 cents or 10.4% to $3.62 as the company reported that it had $129 million U.S. of quarterly adjusted net income, or seven cents per share, which was four cents below estimates.

The energy sector was down as shares in Cenovus Energy Inc. lost 71 cents to $28.93 as the oilsands producer reported $212 million or 28 cents a share of operating earnings, compared with a year-earlier operating loss of $188 million or 25 cents per share.

Cenovus also says its quarterly dividend will rise 10% to 26.62 cents per share.

Internationally, Italian Prime Minister Enrico Letta faces a showdown with his own centre-left party on Thursday that could lead to his resignation and the appointment of Democratic Party leader Matteo Renzi as head of a new government within days.

On the economic front, Statistics Canada told us this morning that its new housing price index rose 0.1% in December, following no change in November. Monthly price movements have been fairly static since June 2012.

ON BAYSTREET

The TSX Venture Exchange remained negative, however, 1.87 points to 979.86

All but four of the 14 Toronto subgroups were higher by midday, led by gold, up 2.1%, health-care stocks, stronger by 1%, and financials, up 0.6%.

The four laggards were anchored mostly by metals and mining, down 2.4%, global base metals, fading 0.7%, and industrials, off 0.4%.

ON WALLSTREET

A bad batch of economic data and lackluster earnings didn't keep investors from buying stocks Thursday.

The Dow Jones Industrial Average regained 18.02 points by noon ET to 15,981.96.

The S&P 500 index forged higher 3.63 points to 1,822.89. The NASDAQ prospered 17.31 points to 4,218.60

Corporate earnings weren't particularly good. Shares of Dow component Cisco fell after the company's weak revenue guidance disappointed investors.

Despite reporting lower revenue and earnings, Cisco raised its dividend.

But cable stocks were moving dramatically after Comcast announced plans to acquire Time Warner Cable in a $45-billion U.S. deal that would combine the two biggest cable companies in the United States.

Time Warner Cable shares jumped on the news, while Comcast fell. Shares of Charter Communications, a smaller cable company that had hoped to acquire Time Warner Cable, plunged. Shares of Cablevision Systems, which some feel could be the next cable company to be taken over, were also down after opening sharply higher.

In other company news, Pepsi announced an increase in quarterly profit and revenue, but missed sales estimates, sending shares lower.

Goodyear reported an increase in profit and beat estimates. Shares of the tire giant spiked almost 10%.

Netflix said it acquired the rights for the animated series "Star Wars: The Clone Wars." The stock was up slightly and hit a new all-time high.

Investors were disappointed after a government report showed retail sales unexpectedly fell in January. Economists were looking for no change last month, but sales dropped 0.4%. Excluding auto sales, sales were flat. Higher-than-expected unemployment claims also didn't help.

Prices for 10-year U.S. Treasuries inched higher, dropping yields to 2.75% from Wednesday's 2.76%. Treasury prices and yields move in opposite directions.

Oil prices eked higher four cents to $100.33 U.S. a barrel.

Gold prices was positive $2.90 to $1,297.90 U.S. an ounce.



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Source: Baystreet Stock Market Update (Canada)


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