Earnings, falling commodities help take TSX lower; N.Y. up despite consumer data

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market was negative late morning as a higher American dollar depressed metal prices while industrials fell following disappointing results from Canadian Pacific Railway (TSX: CP.TO).

The market found limited support from the telecom sector following better-than-expected earnings from Rogers Communications (TSX: RCI-B.TO). The S&P/TSX composite index fell 57.1 points to 11,177.8, falling for a third straight session.

"After this big rally, profit taking is normal, to be expected," said Paul Vaillancourt, director of asset allocation at Franklin Templeton Managed Solutions, adding that the markets are from a technical point of view in a confirmed uptrend.

"Our strategy is to buy the weakness and we will be doing so. I think there's a lot of cash on the sidelines that will be doing the same thing and interestingly, all these dips in the last six months we've seen have been bought up because there's a lot of people adding money to the market on weakness."

The Canadian dollar was down 0.06 of a cent to 93.66 cents after a stronger greenback pushed the loonie down about 1.3 cents US on Monday.

Rogers shares were up $1.21 to $30.11 after the telecom company reported quarterly net income of $485 million or 79 cents a share, compared to year-earlier earnings of $495 million or 78 cents a share. After adjustments, net income totalled $505 million or 82 cents a share, up from 73 cents a year earlier and well above analyst expectations of 54 cents per share. Revenue at the wireless division was up seven per cent, fuelled by growth in postpaid subscriptions attributed to the popularity of the Apple iPhone.

Canadian Pacific Railway Ltd. (TSX: CP.TO) said that third-quarter net income rose to $195.4 million or $1.16 cents a share, up from $170.7 million or $1.10 cents a share a year ago. However, revenue fell to under $1.1 billion from over $1.3 billion a year ago and its shares dipped $1.13 to $47.60.

The TSX energy sector was ahead 0.33 per cent as the December crude contract on the New York Mercantile Exchange gained 39 cents to US$78.21 a barrel.

But the base metals sector declined 2.25 per cent as December copper was down two cents at US$2.99 a pound. Teck Resources (TSX: TCK-B.TO) lost $1.05 to $33.01.

The December bullion contract on the Nymex declined $4.70 to US$1,038.10 an ounce, sending the gold sector down 0.56 per cent. Goldcorp Inc. (TSX: G.TO) faded 52 cents to $40.43.

Financials were also a major drag, down 0.8 per cent as CIBC (TSX: CM.TO) gave back 95 cents to $63.

The TSX Venture Exchange declined 4.06 points to 1,301.89.

New York indexes were mainly higher as investors balanced positive news from the housing sector with an unexpected slip in consumer confidence during October.

The Dow Jones industrial average gained 43.4 points to 9,911.3 as the U.S. Conference Board's Consumer Confidence Index sank to 47.7 in October - its second-lowest recording since May and well below the expected reading of 53.1.

A reading above 90 means the economy is on solid footing.

"Both the 'current conditions' and 'expectations' components fell, with most of the weakness coming from the latter, which doesn't bode well for consumer spending as it was dragged lower by employment prospects than income," observed BMO Capital Markets senior economist Jennifer Lee.

The Nasdaq composite index slipped 9.83 points to 2,132.02 while the S&P 500 index inched up 0.35 of a point to 1,067.3.

The Standard & Poor's/Case-Shiller home price index of 20 major cities rose one per cent from July to a seasonally adjusted reading of 144.5.

While prices are down 11.4 per cent from August a year ago, the annual declines have slowed since February.

Prices are at levels not seen since August 2003 and have fallen almost 30 per cent from the peak in May 2006.

In other corporate news, utility TransAlta Corp. (TSX: TA.TO) said net income rose to $66 million or 34 cents per share in the third quarter, up from $62 million or 31 cents per share in the year-earlier period. Revenue fell to $666 million from $791 million and its shares were off three cents to $21.02.

Kinross Gold Corp. (TSX: K.TO) shares were $1.04 to $20.61 as the company cut its production guidance for 2009 on Monday due to lower than expected results from its operations in Brazil due to continuing problems at its Paracatu mine. The gold miner said it expected to produce 2.2 million gold equivalent ounces at an average cost of sales per ounce of $435 to $450 for 2009.

Lululemon Athletica Inc. (TSX: LLL.TO) shares jumped $2.79 or 10.2 per cent to $30.18 after the athletic clothing retailer raised its earnings guidance for its third quarter due to better than expected sales.

Meanwhile, Asian stocks retreated Tuesday, following losses on Wall Street amid rising concerns the markets have gotten ahead of economic realities.

In Japan, the benchmark Nikkei 225 stock index lost 1.5 per cent while Hong Kong's market, which was closed Monday, dropped 1.9 per cent.

China's Shanghai market led Asia's declines, tumbling 2.8 per cent.

London's FTSE 100 index was ahead 0.58 per cent, Frankfurt's DAX and the Paris CAC 40 were up 0.15 per cent.