Stocks on Bay Street closed flat on Tuesday -- as investors brushed off a better-than-expected Q4 earnings report from BMO and news that the US government was preparing to buy billions in bad mortgage debt and also set up a program to help companies that provide consumer loans.
The S&P/TSX composite index was up 1.99 points to 8,442.86.
The Bank of Canada has more room to slash interest rates, the OECD said in a report on Tuesday, forecasting Canada's economy will shrink for three straight quarters as the global crisis bites into domestic spending.
The economy is now in a recession, said the Organisation for Economic Co-operation and Development, which predicted gross domestic product would shrink 1.6 percent in the fourth quarter, 1.4 percent in the first quarter of 2009 and 0.3 percent in the second quarter, before returning to growth.
The economy will contract 0.5 percent in 2009, it estimated.
Bank of Montreal has reported fourth-quarter results with no credit-market surprises and net income of $560 million, up 24 percent from a year ago. CEO Bill Downe stated that the results ''reflect BMO's relative strength and stability among global financial institutions.''
Shares in Denison Mines Corp. fell after the company and its partners said they are postponing development of the Midwest uranium project in Saskatchewan because of current weak economic conditions.
On the data front -- retail sales totalled $36.3 billion in September, up 1.1 percent from August and the strongest sales increase in eight months. Statistics Canada reports sales by new-car dealers were up for the first time since January, accounting for most of the growth just as the global economic crisis was beginning to set in.
Also -- Statistics Canada reports 480,370 Canadians received regular Employment Insurance benefits in September, 5,080 or one percent fewer than in August. Regular benefit payments increased 5.5 percent during the month to $772.4 million.
Down south -- The Bureau of Economic Analysis revised its read of the third-quarter decline in GDP to 0.5 percent from 0.3 percent. The Conference Board's November consumer confidence survey is due out a bit later today.
The Standard & Poor's Case Shiller home price index, meanwhile, showed a third-quarter decline of 16.6 percent year over year, the worst decline on record.
The Canadian dollar, meanwhile, was trading at 81.63 cents US, up 0.60 cent after surging up by 2.7 cents Monday.
BAYSTREET
Seven of the TSX sub-groups were traded higher today -- real-estate stocks gained 2.35; utility issues ahead 2.01 percent and energy stocks gained 1.04 percent.
On the downside -- tech stocks were down 2.93 percent followed by a 2.82 percent drop in mining issues and a 1.21 percent slump in industrial stocks.
Gold stocks fell 0.92 percent while gold was down $1 to close at $818.50 US an ounce.
Meanwhile, the TSX Venture Exchange moved off 2.83 points to 719.96 and NASDAQ Canada stocks shed 29.12 points to 415.88.
ON WALLSTREET
U.S. stocks ambled mostly higher on Tuesday, giving the Dow Jones Industrial Average its first three-day winning streak in nearly three months, as the technology sector weighed on cheer over the government's plan to boost consumer lending.
The Dow Jones Industrial Average, at one point up some 164 points and at another down 161 points, ended the session with a gain of 36.47 points, or 0.4 percent, at 8479.86. The S&P 500 added 5.6 points, or 0.7 percent, to 857.41, but the Nasdaq dropped 7.29 points, or 0.5 percent, to 1464.73.
United Technologies Corp. was the Dow's largest laggard, with its shares sliding 4 percent.
Shares of Cisco Systems Inc. fell 6 percent on reports it plans to shutter its U.S. and Canadian operations for the last week of December to cut costs.
As trading got underway, several financial firms appeared to be getting government help as well. Goldman Sachs garnered strong interest in a government-backed issuance of $2 billion to $3 billion in bonds, according to a report by The Wall Street Journal. The sale is expected to conclude Tuesday, and Citi and General Electric are expected to stage similar government-assisted bond sales.
American International Group announced voluntary restrictions on executive compensation and said that CEO Edward Liddy would receive a base salary $1 a year for 2008 and 2009. AIG has received hundreds of billions of dollars in government investments and aid this year.
Looking at earnings news, computer systems maker and Dow component Hewlett-Packard delivered earnings that beat estimates on the top line but saw profit decline slightly year over year. Shares dropped 5.9 percent to $33.60.
In the merger space, mining concern BHP Billiton dropped a hostile takeover bid for Rio Tinto on a sharp decline in commodity prices and tough credit conditions. BHP gained 15 percent to $38.27, and Rio Tinto fell 27 percent to $106.09.
Longer-dated U.S. Treasury securities were soaring in price. The 10-year was up 2-4/32, yielding 3.08 percent. The 30-year was gaining 3-16/32 to yield 3.60 percent. The American dollar was falling vs. its major foreign competitors.
Crude-oil futures fell as concerns over a sharp slowdown in energy demand weighed on sentiment. Crude for January delivery fell $3.73 US to close at $50.77 a barrel.
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