Wednesday, January 14, 2009
Daily Market Wrap
Stocks on Bay Street traded deep in the red Wednesday -- in a broad-based sell-off -- as a surprisingly weak US retail sales report and news that Nortel Networks filed for bankruptcy protection weighed on sentiment.
The S&P/TSX composite index was down 258.59 points to 8,702.96.
Nortel Networks Corp. filed for bankruptcy protection. Toronto-based Nortel said today that the company and its various subsidiaries would seek protection from creditors with filings in Canada, the United States and Europe. The move comes in advance of an interest payment Nortel was scheduled to make this week of about US$107 million.
In earnings -- Canwest Global Communications Corp. reported a loss of $33 million for its fiscal first quarter on Wednesday, citing a deteriorating economy, low advertising revenue and accounting issues related to some of its specialty television channels.
The loss amounts to 18 cents per share and reverses year-earlier earnings of $41 million or 23 cents per share.
Corus Entertainment Inc. said Wednesday it was reducing its 2009 earnings guidance despite recording profits in its first fiscal quarter. The Toronto-based media company reported earnings of $40.6 million, or 50 cents a share, up slightly from year-earlier earnings of $39.4 million or 46 cents a share.
Cogeco Inc. reported a profit of $11.1 million or 66 cents a share, reversing year-earlier losses of $10 million or 60 cents a share. The company says revenue rose 18.5 percent to $308.4 million from $260.3 million.
In economic news -- the Census Bureau said Wednesday that retail sales for December declined 2.7 percent, vs. an expected decline of 1.2 percent. Factoring out autos, retail sales declined 3.1 percent, vs. a 2.5 percent decline in the prior month and the expectation for a 1.4 percent decline.
Also -- the Mortgage Bankers Association said early Wednesday that the market composite index, a measure of mortgage loan application volume increased 15.8 percent on a seasonally adjusted basis to 1324.8 for the week ended Jan. 9. On an unadjusted basis, the index increased 95.7 percent compared with the previous week and 52.4 percent from a month prior.
The Canadian dollar, meanwhile, was trading down 1.47 cent to 80.15 cents US.
BAYSTREET
All of the TSX sub-groups traded lower today -- mining stocks were off 9.17 percent, industrial issues were down 4.07 percent and real-estate stocks shed 4.00 percent.
COMEX gold for February delivery fell $11.90 to $808.60 US an ounce.
Meanwhile, the TSX Venture Exchange was 19.37 points lower at 849.53 and the NASDAQ Canada was off 14.27 points at 459.68.
ON WALLSTREET
U.S. stocks took their hardest hit in weeks, paced by sharp declines in energy and financial shares, after awful December retail sales illustrated the depth of the recession.
Down for a sixth consecutive session, the Dow Jones Industrial Average fell 248.42 points, or 2.9 percent, to 8,200.14. The S&P 500 shed 29.17 points, or 3.4 percent, to 842.62, and the Nasdaq Composite declined 56.82 points, or 3.7 percent, to 1,489.64.
Late Tuesday, Citigroup said it is selling 51 percent of its Smith Barney brokerage unit to Morgan Stanley for $2.7 billion in much-needed cash.
However, the news failed to soothe investors, with Citi stock plunging 14 percent Wednesday on bets that the brokerage sale marks the beginning of the break-up of the troubled banking firm.
On the Dow, shares of General Electric Co. slumped after Barclays said the firm's quarterly results could be at the lower end of estimates and that Moody's could then cut its ratings outlook on GE's debt to negative.
Deutsche Bank warned of a fourth-quarter loss of roughly $6.33 billion, while Morgan Stanley analysts said HSBC may have to raise as much as $30 billion and slice its dividend in half. Shares of DB and HSBC were on the decline.
Luxury jeweler Tiffany warned Wednesday that its fourth-quarter profit suffered dim holiday same-store sales and reined in its full-year earnings forecast again.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.20 percent from 2.29 percent Tuesday. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
U.S. light crude oil for February delivery fell 43 cents to $37.37 US a barrel on the New York Mercantile Exchange, erasing earlier losses following the release of the government's weekly oil inventories report.
