The Toronto stock market added today to impressive gains racked up in the previous session, which were sparked by news that American financial services giant Citigroup Inc. was operating at a profit for the first two months of this year.
New York markets leveled off as caution returned to the market after a day of furious buying.
Toronto's S&P/TSX composite index finished Wednesday’s trading ahead 132.83 points to 8,013.24, after rising 313 points or 4% on Tuesday, its biggest gain this year.
Analysts say that Tuesday's rally was also fed by short covering, which occurs when investors need to buy stock to replace shares that were borrowed and then sold on expectations of a market decline.
Investors also took in comments from U.S. Treasury Secretary Timothy Geithner that the Obama administration will unveil the government's plan for dealing with banks' toxic assets within the next couple of weeks.
During an interview aired Tuesday night on "The Charlie Rose Show," Geithner said the plan the administration has put together will provide financing to private investors who are willing to buy banks' bad assets. He predicted the plan will succeed but will take time to work.
The TSX financial sector was flat following Tuesday's 12% surge as TD Bank advanced 46 cents to $38.96 and Scotiabank lost 36 cents to $28.34.
Bank of Montreal declined 46 cents to $29.25 as it announced a preferred share issue worth $150 million to $225 million paying 6.5% annually. BMO had previously bulked up its capital in December with a $1-billion issue of common shares and $450 million in 99-year notes that pay 10.2% interest and qualify as Tier 1 capital.
The energy sector backed off following the release of a report from the U.S. Department of Energy showing that crude supplies in the U.S. climbed unexpectedly by 700,000 barrels last week against an expected drop of one million barrels.
EnCana Corp. fell 84 cents to $48.33 and Suncor Inc. backed off 79 cents to $29.61.
The gold sector shone, sparked by Goldcorp Inc., which climbed $2.28 to $36.27.
Base metal stocks also made headway with Teck Cominco Ltd. ahead 33 cents to $4.42 and FNX Mining rose 21 cents to $3.84.
Bombardier Inc. shares jumped 21 cents to $2.80 after it said today it had finalized an agreement to build 30 of its CS100 jets at a price of $1.5 billion U.S. for Germany's Deutsch Lufthansa AG.
Shares in travel operator Transat A.T. Inc. fell 82 cents to $6.78 after it reported a sharp increase in its first quarter loss and added it was also suspending its quarterly dividend in order to conserve cash during the global economic slump.
The Montreal-based company said its quarterly loss jumped to $29.4 million from $7.9 million from the previous year.
Descartes Systems Group which provides logistics services and software to the freight-carrying industries, says reduced tax recoveries pushed down its quarterly profit to $15.7 million U.S., down from $17.9 million a year earlier. Its shares were ahead 28 cents to $3.07.
The Canadian dollar slid 0.31 cents to 77.74 cents U.S.
BAYSTREET
In Toronto, 10 of the 13 TSX subgroups finished the day higher, gold leading the attack with a 6.1% surge, followed by materials, up 5.2% and metals and mining, ahead 3%.
The three losing groups were weighed down by telecoms, off 0.7%, consumer staples, down 0.4% and energy, down 0.3%.
The TSX Venture Exchange gained 5.35 points to 823.90, while the Nasdaq Canada index had a healthy 12.39-point improvement, to 404.79.
ON WALLSTREET
The Dow Jones Industrials Exchange squeaked ahead 3.91, to finish at 6,930.40. The S&P 500 index advanced 1.76 to 721.36, while the Nasdaq Composite Index was in the green 13.36 points to 1,371.64
Citigroup's news energized financial stocks, which have been languishing under increased worries about nationalizing American banks and a run of bad news from U.S. financial institutions including the $62-billion U.S. loss handed in by insurer American International Group Inc. last week.
Citi shares rose another seven cents or 4.8% to $1.52 U.S. after surging 38% Tuesday.
The big question Wednesday was whether the market could maintain its momentum throughout the day.
Competitors Morgan Stanley, Goldman Sachs and Wells Fargo also advanced.
Tech stocks advanced, particularly Dow component Hewlett-Packard, which surged 6% on a UBS upgrade, Reuters reported.
On the economic front, the February budget deficit increased by $192.8 billion in February, the U.S. government reported, short of forecasts for a rise of $205 billion, according to Briefing.com estimates.
The deficit for the first five months of fiscal 2009 rose to a record $764.5 billion, over $300 billion more than the entire deficit for fiscal 2008, which was a record. The deficit has been rising because of lower tax revenue and higher government spending on the bank bailout plan.
Treasury prices inched lower, raising the yield on the benchmark 10-year note to 3.02% from 3% Tuesday. Treasury prices and yields move in opposite directions.
U.S. light crude oil for April delivery settled down $3.38 to $42.33 U.S. a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery rose $14.80 to settle at $910.70 U.S. an ounce.
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