News Column

Stocks head south

August 1, 2014



Jobs numbers leave investors cold







North American stock markets looked to extend the sharp losses already registered as August trading got under way amid U.S. employment data that slightly missed expectations.

The S&P/TSX composite index turned sharply negative 159.43 points, or 1%, to approach noon hour at 15,171.31. Markets in Toronto will be closed Monday for Civic Holiday.

The Canadian dollar dipped 0.08 at 91.62 cents U.S.

Markets were hit by disappointing earnings news Thursday by the likes of Nike, Valeant Pharmaceuticals, Barrick Gold, and Suncor Energy.

In earnings news Friday, pipeline company Enbridge reported a second-quarter net profit of $756 million, or 91 cents per diluted share, compared with $42 million, or five cents per diluted share, in the same quarter of 2013.

Cash flow from operating activities was $812 million, down from $937 million year-over-year. Adjusted earnings rose to $328 million or 40 cents per share from $306 million, or 38 Canadian cents, a year earlier, a penny better than expected.

Regional telecom company Bell Aliant reported a higher second-quarter profit of $72 million, or 32 cents per share, compared with $66 million, or 29 cents per share, in the same quarter of 2013.

Revenues were down at $683 million from $692 million year-over-year. BCE Inc., which already owns 44 per cent of Bell Aliant, recently announced it's going to take full ownership of the Halifax-based company through a $3.95-billion deal.

ON BAYSTREET

The TSX Venture Exchange sank 1.59 points to 999.93

All but one of the 14 Toronto subgroups were lower, as energy stocks slid 2.1%, metals and mining weakened 1.7%, and financials faded 1.2%

The lone holdout was gold, up 0.4%.

ON WALLSTREET

The calendar may have changed to August, but stocks have resumed their late July tumble.

The Dow Jones Industrials dropped 84.44 points to 16,478.86, after yesterday's 300-point-plus plunge.

The S&P 500 lost 9.35 points to 1,921.32. The NASDAQ composite docked 34.55 points to 4,335.22.

GoPro's debut earnings report failed to impress Wall Street's extreme expectations, driving the gadget maker's stock down 14%.

Iliad dropped 7% in Europe after the French telecom firm made a surprise $15-billion U.S. takeover bid for T-Mobile USA

On the other hand, shares of LinkedIn popped 9% after the social media company posted better-than-expected quarterly results. Expedia traveled 5% higher on upbeat earnings and a 29% jump in bookings.

Tesla also drove 2.5% higher ding after Elon Musk's electric car maker reported strong sales and a profit that topped forecasts.

Bally Technologies hit the jackpot as Scientific Games agreed to acquire the slot-machine maker for $3.3 billion U.S. Bally spiked 30% on the buyout, which also sent Scientific Games climbing 9%.

Procter & Gamble rallied about 4% after posting a solid earnings beat despite shrinking sales. Investors largely overlooked the consumer products giant's tepid outlook for the year.

Burger King relinquished an early 2% gain as investors digest the fast food chain's earnings beat.

Other big-name companies also reported earnings, including Clorox and Chevron.

Warren Buffett's Berkshire Hathaway is scheduled to post results after the close.

Employers in the U.S. added 209,000 jobs in July. That was well shy of the 288,000 jobs that were created in June and below the gain of 230,000 jobs predicted by economists.

The weaker-than-expected jobs report could ease fears on Wall Street that the Federal Reserve will hike interest rates early next year.

The U.S. government said the unemployment rate ticked up to 6.2% from 6.1%.

In other economic news, a new ISM report showed U.S. manufacturing activity shifted into a higher gear in July. However, a separate report revealed consumer sentiment dipped in July to the lowest level since March.

Prices for 10-year U.S. Treasuries hiked, lowering yields to 2.49% from Thursday's 2.56%. Treasury prices and yields move in opposite directions.

Oil prices sank 86 cents to $97.28 U.S. a barrel.

Gold prices strengthened $11.20 to $1,292.50 U.S. an ounce.



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Source: Baystreet Stock Market Update (Canada)


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