TSX declines on soft energy stocks;NY weak on retail data, oil spikes

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market faltered a day after running ahead to new record highs, as bullion prices moved lower and energy stocks failed to respond to another spike in the price of oil.

New York markets were also lower despite April retail sales which came in better than expected, as Wal-Mart Stores delivered a glum outlook. Investors also took in a major deal that will see American personal computer and printer maker Hewlett-Packard Co. acquire Electronic Data Systems Corp. in a deal that the companies value at US$13.9 billion.

Toronto's S&P/TSX composite index was well off earlier triple-digit losses and at mid-afternoon was off 19.79 points to 14,646.28.

Monday's showing pushed the TSX about 40 points past the previous high from last July. But analysts note that the rally has been based on energy and base metals stocks, along with strong gains by individual companies, raising nervousness about the sustainability of this latest push upward.

"First of all it's leadership, three stocks (EnCana Corp., Potash Corp. and Research in Motion Ltd.) have pushed it up to new highs - it's not as broad-based as it was even last summer," said Paul Vaillancourt, director of asset allocation at Franklin Templeton Managed Solutions in Calgary.

"While we are long term believers in the secular demand and increased demand for base metals and base materials, perhaps things are a bit overdone right now and we're due for a bit of a reversion."

The TSX Venture Exchange was off 18.56 points to 2,557.55 while the Canadian dollar moved up 0.17 cent to 99.73 cents US.

New York's Dow Jones industrials slipped 52.27 points to 12,824.04.

The Nasdaq composite index was off 0.54 of a point to 2,487.95 while the S&P 500 index dipped 1.42 points to 1,402.16.

The U.S. Commerce Department reported retail sales dipped 0.2 per cent last month, in line with expectations. But excluding autos, retail sales rose 0.5 per cent, a better performance than expected.

Wal-Mart Stores Inc. reported a 6.9 per cent rise in first-quarter profit to US$3.02 billion, as revenue increased 10.3 per cent to $95.3 billion. However, the world's largest retailer said same-store sales in the United States were up only 2.9 per cent from a year earlier, and in the current quarter are expected to rise by between nothing and two per cent. Wal-Mart shares were down $1.04 to US$56.98.

Investors seemed little moved by comments from U.S. Federal Reserve chairman Ben Bernanke, who said turmoil in financial markets has eased but the situation is still "far from normal."

The TSX energy sector slipped about 0.3 per cent while oil prices advanced. The June crude contract on the New York Mercantile Exchange climbed $1.60 to US$125.83 a barrel on concerns that Iran may consider cutting crude oil production.

In later news reports, Iranian officials denied that production cuts were imminent, but said a reduction has been discussed.

EnCana Corp. (TSX: ECA.TO) fell 73 cents to $91.47 and Petro-Canada (TSX: PCA.TO) lost 65 cents to $56.05.

Gold prices were lower on a strengthening greenback with the June bullion contract in New York down $15.30 to US$869.60 an ounce. The TSX gold sector fell 0.84 per cent as Goldcorp (TSX: G.TO) retreated 53 cents to $39.13.

Iamgold Corp. (TSX: IMG.TO) shares were 11 cents higher to $6.16 after first-quarter earnings almost tripled to US$34.4 million on high gold prices and asset sales.

Also keeping pressure on the TSX was Research In Motion (TSX: RIM.TO), down $1.26 to $140.99 and Potash Corp., (TSX: POT.TO) down $3.36 to $198.39.

The base metals sector moved into positive territory, rising 0.3 per cent.

HudBay Minerals (TSX: HBM.TO) rose 36 cents to $17.90.

Uranium miner Cameco Corp. (TSX: CCO.TO) reported first-quarter earnings of $133 million, up 125 per cent from a year ago as revenue increased 45 per cent to $593 million on higher uranium prices and volumes. Its shares were down 38 cents to $39.90.

The financial sector was positive ahead 0.3 per cent with Bank of Montreal (TSX: BMO.TO) ahead 38 cents to $49.50.

Rona Inc. (TSX: RON.TO) reported a 5.2 per cent decline in same-store sales in the first quarter and net earnings at the largest Canadian retailer of hardware and renovation products declined to $1 million, compared with $9 million a year ago. Its shares were knocked down 44 cents to $13.01.

DundeeWealth Inc. (TSX: DW.TO) suffered a $49.7-million first-quarter net loss after another steep writedown of asset-backed commercial paper. Revenue was $211.3 million in the January-March period, off from $226.9 million a year earlier, and DundeeWealth took a $75.9-million ABCP writedown, on top of $95.2 million written down last year. Its shares dipped nine cents to $13.65.