North American stock markets extend gains amid string of positive economic news

Enlarge Image

The fading name on the building in Toronto that used to house the Toronto Stock Exchange on August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim

TORONTO - The TSX closed higher while New York's Dow Jones industrials moved further into record territory Wednesday, building on the gains of the previous session amid data showing the American economy is slowly recovering.

The S&P/TSX composite index gained 95.93 points to 12,831.96 and the TSX Venture Exchange dipped 2.51 points to 1,109.72.

The Canadian dollar fell 0.33 of a cent to 96.95 cents US after the Bank of Canada kept its key rate unchanged at one per cent and indicated that persistent economic weakness and low inflation means a hike is a long ways off.

Positive employment data helped push the Dow Jones industrial average to a fresh, record high for a second day after closing Tuesday at 14,254 — its highest level since early October 2007. Payroll firm ADP said the private sector created 198,000 jobs last month. The data came out two days ahead of the U.S. government's employment report for February. Economists have been expecting that report to show the economy created about 155,000 jobs.

The Federal Reserve’s latest economic survey also supported buyers on Wednesday.

The central bank’s so-called Beige Book said the U.S. economy expanded in all parts of the country in January and February, helped by strong auto sales, a continued recovery in housing and improved job prospects.

The Dow Jones industrial average gained 42.47 points to 14,296.24, the second day in a row the blue chip barometer hit a record high close. The Nasdaq composite index was down 1.77 points to 3,222.37 while the S&P 500 index advanced 1.67 points to 1,541.46.

"We're at an all time high (in New York) and that can just kind of feed off itself," said Garey Aitken, chief investment officer at Bissett Investment Management.

"I can't help but think that helps the psyche of the investor on the street when they see good news for equity market."

The TSX is still almost 15 per cent shy of its record close of 15,073 in June 2008.

And although it's lagged New York so far this year, its performance outside of materials has been very positive, led by a 14 per cent year to date jump in industrial stocks and a six per cent runup in financials.

"The overall index is being held back by those commodity sectors," added Aitken.

"But the rest of the market is pretty good, in fact, in Canada, there’s a lot of good news going on."

The gold sector was ahead about 4.3 per cent as April bullion closed unchanged at US$1,574.90 an ounce. Goldcorp Inc. (TSX:G) improved by $1.54 to C$34.44.

The base metals component was up 2.7 per cent with May copper contract in New York was down two cents at US$3.49 a pound. Teck Resources (TSX:TCK.B) was up $1.03 to C$31.56.

The tech sector ran up 2.39 per cent with BlackBerry (TSX:BB) gaining 95 cents or 7.36 per cent to $13.85 after the smartphone company secured the second major supply contract this week for its new BlackBerry Z10 devices. The Waterloo, Ont.-based firm said that a mental health organization based in the United Kingdom has ordered 1,800 of the touchscreen phones that will be delivered throughout the year. Earlier this week BlackBerry signed a supply agreement with the German government.

Open Text (TSX:OTC) rose $1.26 to $59.26 after Canada’s largest publicly traded software company announced it has acquired Resonate Knowledge Technologies for an undisclosed sum. Open Text says the two companies have about 500 customers in common in 20 countries and that Resonate KT’s software helps users to easily visualize unstructured data.

The energy sector rose about one per cent while the April crude contract on the New York Mercantile Exchange declined 39 cents to US$90.43 a barrel after the U.S. Energy Information Administration reported that crude supplies climbed by 3.8 million barrels last week, much higher than the 1.1 million-barrel climb that analysts expected.

There was little reaction in the oil market to the death of Venezuelan president Hugo Chavez, who died Tuesday after a two-year battle with cancer. Chavez oversaw a decline in oil production during his 14 years as the leader of Venezuela, which sits on the world’s second-largest oil reserves, and analysts don’t expect that trend to change immediately.

Shares in Suncor Energy (TSX:SU) climbed 43 cents to $31.28.

Talisman Energy Inc. (TSX:TLM) shares added 11 cents to $12.65 after it said it is planning a further $2.3 billion of dispositions or joint ventures over the next 12 to 18 months, including marketing some of its assets in western Canada.

The financials sector led decliners, down about 0.25 per cent following a day of solid gains after Scotiabank wrapped up a strong series of earnings reports from the big banks. Royal Bank (TSX:RY) lost 54 cents to $63.22.

Elsewhere on the earnings front, media company Torstar Corp. (TSX:TS.B) had $24.1 million of net income or 30 cents a share in the fourth quarter, down about 62 per cent from a year earlier as it felt the impact of falling revenue at its media and book businesses. Adjusted earnings came in at 49 cents a share. Torstar missed analyst estimates of 53 cents for net and adjusted earnings. Revenue of $395.7 million also missed expectations for $413.65 million and its shares fell 92 cents or 11.62 per cent to $7.

Dorel Industries Inc. (TSX:DII.B) says its fourth quarter net income was US$29.1 million, up 6.4 per cent from a year earlier. The profit amounted to 91 cents US per diluted share, 21 cents above the consensus estimate. The Montreal-based maker of child car seats, juvenile furniture and bicycles says its revenue was up 10.9 per cent to $622.6 million, beating the consensus analyst estimate by about $30 million. Dorel shares ran ahead $2.39 or 6.3 per cent to $40.29.

Note to readers: This is a corrected story. An earlier version gave an incorrect figure for the TSX record close.