TSX up on U.S. earns, retail data; Dow passes 10,000 for 1st time in a year

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - Rising commodity stocks helped push the Toronto stock market sharply higher Wednesday afternoon with added support from well-received earnings reports by JPMorgan Chase and Intel and September retail data that beat expectations.

Toronto's S&P/TSX composite index was ahead 97.5 points to 11,511. The TSX Venture Exchange rose 13.36 points to 1,335.64.

The TSX found strong support from the energy sector as the bullish reports from the U.S. raised hopes for higher crude demand. The group gained two per cent as the November crude contract on the New York Mercantile Exchange moved up 90 cents to US$75.05 a barrel. On the TSX, Suncor Inc. (TSX: SU.TO) advanced $1.41 to C$40.11.

The financial sector was up just over one per cent after 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. It also said it roughly doubled the amount of money set aside for failed home and credit card loans in the quarter and described the near-term path of the economy as uncertain.

"One thing you can take away from JPMorgan is that the capital markets divisions remain extremely strong," said Eric Brass, equity analyst at MFC Global Investment Management.

"So that bodes well for banks like National Bank (TSX: NA.TO) and Royal Bank (TSX: RY.TO) in Canada that have a lot of their income geared toward trading revenue and capital markets income."

JPMorgan gained $1.41 to $47.07 in New York while on the TSX National Bank gained 56 cents to C$58.71 and Royal Bank added 66 cents to $55.79.

Intel reported after the market closed Tuesday that its profit and sales both dipped eight per cent in the third quarter 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. Intel shares gained 35 cents to US$20.84

"The results are very significant as they act as a bellwether for technology demand among both consumers and businesses," added Brass.

"And it's just more evidence that the consumer market is bouncing and it bodes well for consumer and capital spending."

The Canadian dollar continued to edge towards parity with the U.S. currency, up another 0.87 of a cent to 97.35 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.

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 Dow Jones industrial average jumped 116.1 points to 9,987.1 after briefly crossing the 10,000-mark for the first time in a year.

The Dow is now up 53 per cent from its March low. But it remains 29 per cent below its peak of 14,164.53 hit in October 2007.

The TSX is up 52 per cent since the lows of March 9.

The Nasdaq composite index gained 24.37 points to 2,164.26 while the S&P 500 index was ahead 14.6 points to 1,087.8.

Investors displayed little reaction to minutes from the Federal Reserve's last meeting that indicated policy-makers were conflicted over whether to expand or trim a program intended to drive down mortgage rates and support the housing market.

Elsewhere on the TSX, the base metals sector jumped more than two per cent as December copper rose five cents to US$2.8445 a pound and Teck Resources (TSX: TCK-B.TO) was ahead $1.38 to $34.48.

The gold sector was the leading decliner, down 0.66 per cent as the price of bullion eased from Tuesday's latest record close, with the December bullion contract on the Nymex down 30 cents to US$1,064.70 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 37 cents to $5.93.

Barrick Gold Corp. (TSX: ABX.TO) shares were off 10 cents to $41.26 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.

Miner Pan American Silver Corp. (TSX: PAA.TO) announced Wednesday it plans to acquire Aquiline Resources Inc. (TSX: AQI.TO) on Wednesday in a deal valued at $626 million. Pan American shares fell $1.35 to $25.36 while Aquiline shares jumped $1.18 to $6.65.