Stock markets clung to advances in afternoon trading as investors managed to shore up enough optimism to set aside weak U.S. earnings reports and a warning by the Bank of Canada that the recession will be deeper than it previously predicted.
Both Wall Street and Bay Street were pulled out of negative territory in the late morning and continued to trade ahead in the afternoon.
Toronto's S&P/TSX composite index had put back 121.02 points to end the day at 9,247.17, reversing an earlier slide after the central bank cut its key policy rate by a quarter-point to 0.25% in an effort to jolt the economy into life.
Financial stocks rose, though Royal Bank of Canada slid 31 cents to $41.29. Royal said it is issuing $275 million in preferred shares.
On the TSX, miner Teck Cominco Ltd., leapt nearly 37% to $12.47 after first-quarter profit declined to $241 million from $345 million. Revenue was up 11% to $1.71 billion.
Canadian National Railway Co. said retiring CEO Hunter Harrison will be succeeded at year-end by chief financial officer Claude Mongeau. That followed CN's report that quarterly earnings increased to $424 million from $311 million, thanks to a one-time gain. CN shares surged $1.40 or 2.9% to $50.18
Timminco Ltd. shares lost 54 cents or 22.9% to $1.82 after the company booked a fiscal fourth-quarter loss of $1.3 million on Monday.
UTS Energy Corp., the Canadian oil-sands developer targeted for takeover by Total SA, said it may get a higher price from alternative proposals under discussion.
Better options for shareholders may arise from talks UTS and its advisers are having with unidentified parties, Calgary-based UTS said today in a statement. Last week, UTS rejected an offer from Total for the third time in as many months, saying the $830-million bid was inadequate. UTS shares were even at $1.82.
The Bank of Canada cut its key lending rate to a record low, and may leave it unchanged for a year because inflation is persisting below its 2% target.
The target rate for overnight loans between commercial banks was reduced to 0.25% today, the lowest since the central bank was founded in 1934 and the lowest it can go, the bank said.
The Canadian dollar gained 0.16 cents to 80.89 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, nine were on the plus side. Metals and mining screamed ahead 11.4%, followed by information technology, and financials, jumping 2.8% each.
The three laggards were gold, down 2.7%, materials, skidding 1.5% and utilities, off 0.4%.
The TSX Venture Exchange fell 1.05 points to 974.38 while the Nasdaq Canada Index gained 14.55 to 633.61
ON WALLSTREET
The Dow Jones Industrials average surged 127.83 points to close at 7,969.56.
The S&P 500 index gained back 17.69 points to 850.08, while the Nasdaq Composite Index was up 35.64 to 1,643.85
Wall Street traders reacted to a mixed bag of earnings from big names including Coca-Cola and Caterpillar.
Coca-Cola Co., the world's largest beverage maker, said its first-quarter profit fell 10% to $1.35 billion U.S. Sales dipped 3% to $7.17 billion U.S. Shares lost 3%
Caterpillar Inc., the world's largest producer of construction and mining equipment, posted a first-quarter loss of $112 million U.S., down from a profit of $922 million U.S. a year ago. It was hurt by weaker sales and charges tied to layoffs.
DuPont reported weaker quarterly earnings that topped estimates on lower sales that missed forecasts. The chemical maker also cut its full-year 2009 earnings forecast and said it will take on most of its cost-cutting initiatives in the months ahead. Shares gained 3.5%.
United Technologies reported weaker quarterly earnings that met estimates on a drop in quarterly sales. However, the company said it expects to see profit growth in 2010, sending shares higher. Shares rose 4%.
Citigroup shares gained after the Dow component said at its annual meeting that it will pay back the government the $45 billion U.S. it received in taxpayer assistance.
After the close Monday, IBM reported higher earnings that beat estimates on weaker revenue that missed estimates. The tech leader reiterated its goal of earnings of $9.20 U.S. per share in 2009 and said it is on track to meet its profit goal of $10 to $11 U.S. per share in 2010. Shares inched higher Tuesday.
Also late Monday, Texas Instruments reported weaker quarterly sales and earnings that topped expectations. The chipmaker forecast first-quarter earnings per share above analysts' forecasts. Shares lost 3% Tuesday.
In the flood of U.S. quarterly earnings reports, drugmaker Merck & Co. posted a 57 per cent drop in first-quarter profit, falling short of expectations. It earned $1.43 billion, down from $3.3 billion in the same period last year. Merck shares fell nearly 6%.
Delta Air Lines Inc., the world's biggest airline operator, said it was hit hard by the weak economy but narrowed its net loss to US$794 million from $6.39 billion.
Stocks had risen sharply from multi-year lows since early March as traders bet that the economy was beginning to stabilize. But major indexes suffered triple-digit losses Monday on renewed worries about U.S. banks grappling with growing bad debts.
Treasury prices gained, lowering the yield on the benchmark 10-year note to 2.88% from 2.83% Monday. Treasury prices and yields move in opposite directions.
U.S. light crude oil for May delivery gained 63 cents to settle at $43.51 U.S. a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $4.80 to settle at $882.70 U.S. an ounce.
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