News Column

Stocks wane Wednesday

May 28, 2014

Banks in focus

The Toronto stock market was lower Wednesday amid pressure from the mining sector and mixed earnings reports from two of the big Canadian banks.

The S&P/TSX composite index dipped 47.06 points to conclude Wednesday at 14,610.96

The Canadian dollar reversed 0.13 cents to 91.97 cents U.S.

Bank of Montreal reported quarterly net income of $1.1 billion, up 12% from a year ago. Adjusted earnings per share were $1.63, up 13% from the same quarter last year and 10 cents ahead of estimates. The bank is raising its dividend by two cents to 78 cents per common share. Its shares subsided 18 cents to $76.62.

Investors also weren't thrilled with National Bank. It posted second-quarter net income of $362 million which was down 13% from a year ago.

Adjusted earnings were $1.05 a share, which was a penny higher than analyst estimates and it raised its dividend 4%. However, revenue of $1.28 billion missed expectations of $1.34 billion and its shares fell $1.15 to $45.88.

The latest run of earnings followed reports from Royal Bank, TD Bank and Scotiabank, which also beat expectations. Royal shares retreated 24 cents to $75.08, while TD shares shed nine cents to $53.84. Scotiabank shares eked up two cents to $68.79

Meanwhile, Valeant Pharmaceuticals shares gave back $2.96, or 2.1%, to $138.08 as the company upped the cash portion its hostile takeover offer for Botox maker Allergan by $10 to $58.30 U.S. a share. The stock portion of the offer remains the same at 0.83 of a Valeant share, valuing the proposal at $162.86 per share or almost $50 billion total.

Valeant made its initial bid along with activist investor Bill Ackman. The investor's Pershing Square Capital Management LP holds a 9.7% stake in Allergan.


The TSX Venture Exchange slid 2.15 points to 983.58.

All but two of the 14 Toronto subgroups were in the red by day's end, weighed mostly by metals and mining, down 2.4%, gold, sliding 1.7%, and global base metals, off 1.5%.

The two gainers were industrials, up 0.3%, and energy, nosing ahead 0.2%.


The stock market was in cool-off mode Wednesday after its recent record highs.

The Dow Jones Industrial Average lost 42.32 points to 16,633.18

The S&P 500 fell back 2.13 points from Tuesday's record high to 1,909.78, and the NASDAQ composite index retreated 11.99 points to 4,225.08

Tesla Motors got zapped with junk bond status by ratings agency Standard & Poors, which pegged the electric carmaker's $3 billion U.S. in debt a few notches below investment grade. The ratings firm said Tesla's narrow focus and lack of track record were behind the ratings. Shares were flat in afternoon trading.

DSW, a discount shoe outlet, lost more than a quarter of its market cap in early trading, as earnings came in at the lower end of expectations and same-store sales growth fell 3.7% from the year before.

Michael Kors reported results before the opening bell. Profits were a bit better than expected and sales are up by more than half.

The stock has remained relatively flat for much of the day, but Kors shares are up more than 17% since the start of the year as the brand seems to be winning the battle for upper middle class purse consumers.

Revenue abroad is growing quickly as well. Sales in Europe were double the same time last year.

Toll Brothers reported surprisingly strong earnings before the open, bouncing back from a disappointing start to the year because of the winter weather. Revenue was closer in line with expectations. It was one of the few stocks enjoying a bounce with shares up over 2%.

A handful of other homebuilder stocks are also seeing some small gains as well, including D.R. Horton, Lennar and PulteGroup.

Delta Airlines is up 2.5% in afternoon trading. It continues to be one of the top performers in the S&P 500 this year.

Delta recently announced more routes in and out of Seattle as it grows it presence there, going head-to-head in the "Battle for Seattle" with Alaska Air. Southwest Airlines is also up more than 2% in trading today.

Prices for 10-year U.S. Treasuries hiked, sharply lowering yields to 2.44% from Tuesday's 2.52%. Treasury prices and yields move in opposite directions

Oil prices fell $1.31 to $102.80 U.S. a barrel.

Gold prices plunged $7.70 to $1,257.80 U.S. an ounce.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Baystreet Stock Market Update (Canada)

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