Stock markets higher on Intel, JPMorgan earnings, U.S. retail sales; oil rises

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market advanced Wednesday morning with investors encouraged by a pair of strong U.S. earnings reports and better-than-expected retail sales data from last month.

Toronto's S&P/TSX composite index was well off an early gain of 126 points but at mid-morning still ahead 64.4 points to 11,477.9. The TSX Venture Exchange rose 5.74 points to 1,328.02.

The TSX found strong support from the energy sector as oil prices continued to advance on hopes for higher crude demand.

The group gained 1.6 per cent as the November crude contract on the New York Mercantile Exchange moved up $1.02 to US$75.17 a barrel. On the TSX, Suncor Inc. (TSX: SU.TO) advanced $1.23 to C$39.93.

The financial sector was up just over one per cent after falling Tuesday in the wake of a downgrade of Goldman Sachs Group to neutral from buy from analyst Meredith Whitney. National Bank (TSX: NA.TO) advanced 73 cents to $58.88.

The Canadian dollar continued to edge towards parity with the U.S. currency, up another 0.79 cent to 97.27 cents US.

A weakening U.S. dollar, higher commodity prices and positive Canadian economic data have pushed the loonie substantially higher of late. The Canadian dollar, which hasn't matched the greenback since May 2008, gained more than three cents last week alone.

Intel reported after the market closed Tuesday that its profit and sales both dipped eight per cent in the July-September period as spending by corporations remained weak. However, the results easily surpassed analyst forecasts, and Intel's guidance for the October-December quarter of US$9.7 billion to US$10.5 billion in sales also topped projections.

And JPMorgan Chase, the first of the big U.S. banks to report third-quarter earnings, on Wednesday turned in a US$3.59-billion profit and said it roughly doubled the amount of money it set aside for failed home and credit card loans in the quarter.

In its earnings statement, the bank also described the near-term path of the economy as uncertain.

Despite the gloomy outlook, JPMorgan shares rose $1.27 to US$46.93 while Intel gained 58 cents to US$21.07.

New York markets also racked up solid gains after the Commerce Department reported that retail sales dropped 1.5 per cent last month as car sales plummeted following the end of the government's popular Cash for Clunkers program.

However, the drop was smaller than the 2.1 per cent reading economists had expected, but still the biggest setback since sales dropped 3.2 per cent in December.

Car sales plunged 10.4 per cent, but excluding autos, retail sales rose 0.5 per cent. That's better than the 0.2 per cent increase analysts expected.

"The U.S. economic recovery may be underway, but the best gauge of future consumer spending remains the job market," said CIBC senior economist Meny Grauman, "and on that front the outlook is still negative."

The Dow Jones industrial average jumped 77.6 points to 9,948.7.

The Nasdaq composite index gained 21.35 points to 2,161.24 while the S&P 500 index was ahead 10.05 points to 1,083.25.

Stock markets were sluggish Tuesday following a disappointing decline in sales at drug company Johnson & Johnson that fanned fears that consumers and businesses are still curbing their spending.

Elsewhere on the TSX, the base metals sector jumped 1.6 per cent as December copper rose four cents to US$2.84 a pound and Teck Resources (TSX: TCK-B.TO) was ahead 77 cents to $33.86.

The gold sector was the leading decliner, down 0.5 per cent as the price of bullion eased from Tuesday's latest record close, with the December bullion contract on the Nymex down $3.30 to US$1,061.70 an ounce.

Shareholders are to launch a class-action suit against Novagold Resources Inc. (TSX: NG.TO), claiming it failed to warn investors about the true cost and timing of its Galore Creek mining project. The suit is to be filed in the Ontario Superior Court of Justice on behalf of all investors who acquired Novagold shares between Oct. 25, 2006 and Jan. 16, 2008. Its shares fell 42 cents to $5.88.

Barrick Gold Corp. (TSX: ABX.TO) shares were off 18 cents to $41.18 after it said Tuesday it plans to issue $1.25 billion in debt securities that will be used to reduce the liability related to the company's floating spot-price gold contracts. Moody's Investors Services later affirmed its rating for Barrick and assigned a Baa1 rating to the debt issue.

Orion Oil & Gas Ltd., a new subsidiary of Sprott Resource Corp. (TSX: SCP.TO) announced plans Wednesday that will allow it to access $100-million in financing through a reverse takeover of Wintraysan Capital Corp. (TSXV: WTS-P.V). Sprott shares gained 21 cents to $3.91.

Bombardier Transportation (TSX: BBD-B.TO) has won a US$383-million contract for 100 electric locomotives from Italy's Trenitalia. There is also an option for 50 more locomotives. Bombardier shares added a penny to $4.95.

Plutonic Power Corp. (TSX: PCC.TO) shares fell 26 cents to $3.34 after the company announced a $70.4-million syndicated financing. The money will fund commitments made to the Toba Montrose project transmission line and Plutonic's share of equity capital required for the Dokie Ridge Wind Project.

Overseas, China's Shanghai index rose 1.2 per cent, while Hong Kong's Hang Seng index jumped two per cent. Japan's Nikkei index slipped 0.2 per cent.

In afternoon trading, Britain's FTSE 100 gained 1.67 per cent, Germany's DAX index jumped 2.13 per cent, and France's CAC-40 rallied 1.77 per cent.