News Column

TSX recovers from lows

July 8, 2014

Health-care hit hardest

Equity markets in Canada's largest centre declined on Tuesday, hit by weakness in most major sectors as investors grew nervous that the solid gains of recent months could spur a market correction.

The S&P/TSX composite index was off its lows of the day, but still negative by 35.75 points to close Tuesday at 15,137.18

The Canadian dollar inched up 0.05 cents to 93.66 cents U.S.

Telecoms shares remained in selloff mode, a day after the Harper government announced a new spectrum auction that favours smaller industry players, and were one of the biggest drags on the market.

While the Toronto equity market eased for a second straight session, its benchmark index is still up about 10% since the start of the year.

Financials were lower on the day, but Royal Bank of Canada gained 0.3% to $77.79, and Bank of Nova Scotia fell 0.4% to $71.93.

Shares of energy producers slipped, with oil prices trading lower. Suncor Energy shed 0.2% to $45.37, and Canadian Natural Resources fell 0.1% to $49.06.

Shares of telecoms providers tumbled, with Telus weakening 2.1% to $38.46 and Rogers Communications declining 0.4% to $42.20.

In corporate news, Intertape Polymer Group said late on Monday it raised its dividend by 50%. Intertape's stock shot up 11.4%, to $13.62.

Health-care shares took it on the chin, with Valeant Pharmaceuticals fading 3.5% to $7.13.


The TSX Venture Exchange dropped 3.11 points to 1,027.52.

All but four of the 14 Toronto subgroups were lower on the day, with health-care falling 1.6%, information technology off 1%, and telecoms sliding 0.8%.

The four gainers were led by gold, up 1.4%, while materials advanced 0.6%, and the metals and mining group up 0.4%.


All three major U.S. indexes retreated with the NASDAQ down 1.4%. This is the 30th trading day so far this year that the tech-heavy index has lost 1% or more.

The Dow Jones Industrials slumped 117.59 points to 16,906.62

The S&P 500 fell 13.94 points to 1,963.71, and the NASDAQ composite collapsed 60.67 points to 4,391.46.

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.

Tuesday's selloff was most pronounced in the tech world, where some of big so-called momentum stocks were pulling back, mostly Twitter. Shares of the microblogging service tanked over 7% Tuesday.

Linkedin, Facebook, Netflix, and Amazon were also losing big.

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 close.

Shares of American Apparel plunged 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. 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.

Also on the fashion front, Guess rallied after the retailer was upgraded by analysts at Piper Jaffray, who pointed to strength in the company's European business.

Prices for 10-year U.S. Treasuries surged, lowering yields to 2.56% from Monday's 2.62%. Treasury prices and yields move in opposite directions.

Oil prices gained four cents to $103.57 U.S. a barrel.

Gold prices recovered $1.90 to $1,318.90 U.S. an ounce.

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Source: Baystreet Stock Market Update (Canada)

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