News Column

Sharp dip at open

July 8, 2014

Coutu, Valeant in news

The struggle continued on Bay Street Tuesday morning, with shares tumbling pretty much right across the board.

The S&P/TSX composite index plummeted 111.89 points to start out Tuesday's session at 15,061.04

The Canadian dollar inched forward 0.02 cents to 93.62 cents U.S.

Fewer Canadian firms expect to have difficulty meeting a surge in demand than did in the first quarter, the Bank of Canada said on Monday in a sign that pressures on production capacity are lessening rather than building.

Pharmacy chain Jean Coutu Group Inc reported higher quarterly sales, helped by demand for its high-margin generic drugs and the expansion of its network of franchised stores. Coutu shares lopped off 35 cents, or 1.6%, to $21.85.

William Ackman'sPershing Square Capital Management proposed on Monday a slate of six directors for the board of Allergan as the hedge fund presses forward with its $53-billion takeover bid with Valeant Pharmaceuticals International for the Botox maker. Valeant shares sank $1.98, or 1.5%, to $129.92.

Barclays raised the target on Alimentation Couche-Tard to $33 from $30 with an overweight rating. Couche-Tard shares gave up 12 cents each to $28.73.


The TSX Venture Exchange dropped 1.02 points to 1,029.61.

All but one of the 14 Toronto subgroups were lower, with information technology stocks sinking 2%, while health-care issues dipped 1.7%, and telecoms fell 1.5%.

The lone holdout against the negative tide was in gold, up 0.5%.


Led by losses in Europe, stocks kicked off Tuesday's session solidly in the red, leaving the Dow below the 17,000 mark it broke through last week for the first time.

The Dow Jones Industrials slumped 109.16 points to 16,915.05

The S&P 500 eased back 12.31 points to 1,965.34, and the NASDAQ composite collapsed 56.89 points to 4,394.64.

Aluminum producer Alcoa is scheduled to unveil its earnings after the closing bell, marking the start of the quarterly results season. Restaurant chain Bob Evans is also due to report after the market close.

Shares of American Apparel are under pressure after the struggling company warned it received a notice of default from a lender related to last month's ouster of founder and CEO Dov Charney.

However, American Apparel disputed that default claim and is exploring ways to tap its revolving credit facility to repay the lender. Also, the New York Post reported American Apparel has reached a preliminary deal to transfer control of the board to a hedge fund aligned with Charney.

Meanwhile, investors are seizing on a potential discount on shares of Groupon. The daily deals site jumped 4% after it was reportedly upgraded to "buy" from "neutral" by B. Riley.

With the S&P 500 index already up 7% this year, investors will be looking closely to see whether corporate profits can support stocks and to what extent markets have been relying on cheap money from the Federal Reserve to push indexes to new records.

Second-quarter earnings are expected to grow 4.9% compared to the same period last year, though that estimate is down from the 6.8% prediction at the start of the quarter, according to data from FactSet.

European markets were weaker, with airline and banking stocks under pressure. Air France KLM cut its earnings forecast due to overcapacity on routes to North America and Asia. U.S. airlines were also under pressure, highlighted by a 4.5% dive for Delta Air Lines.

Some bank stocks took a hit from a New York Times report saying Germany's Commerzbank and Deutsche Bank are next in line for punishment by U.S. authorities. Sentiment was also soured by weaker than expected German export data for May.

Prices for 10-year U.S. Treasuries surged, lowering yields to 2.57% from Monday's 2.62%. Treasury prices and yields move in opposite directions.

Oil prices picked up two cents to $103.52 U.S. a barrel.

Gold prices spiked $7.90 to $1,324.90 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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