Stock markets chalked up strong gains Wednesday as investors put the best face possible on data showing a steeper-than-expected contraction of the U.S. economy in the first quarter.
In New York, stocks rallied after the Federal Reserve held interest rates steady, as expected, but issued a slightly more upbeat economic outlook.
The TSX composite index ended the day up 68.28 points at 9,416.31, the first positive close of the week for Toronto's main index.
On the earnings front, Rogers Communications Inc. shares dropped 14 cents to $29.45 after it said weak advertising revenues in its media division cut into its profits in the first quarter of 2009. The company reported net earnings of $309 million for the quarter ended March 31, down 10% from a year-earlier.
Maple Leaf Foods Inc. shares were 15 cents higher to $8.60 after posting first-quarter profit of $2.9 million, reversing a year-ago loss of $10 million. Margins are still down in packaged meat operations as recovery from the tainted meat recall continues while sales were up 6.3% to $1.3 billion.
The Toronto base metals sector was the biggest percentage advancer, with Teck Cominco Ltd. ahead 82 cents to $12.00.
Sherritt International Corp. posted a first-quarter loss of $42.9 million, reversing a year-ago profit of $89 million. The mining company sustained a $57.4 million loss related to the sale of oil and gas assets. Revenue increased to $349 million from $314.2 million and its shares climbed 13 cents to $5.06. Shares faded two cents to $4.91.
Shares of Western Canadian Coal Corp. rose another 47% today to $1.42, after a 23% gain the previous day, when the company said it has signed enough new sales contracts to continue running its Brule mine and Wolverine operation in British Columbia.
The TSX energy sector was ahead. Oil prices rose even as the U.S. Energy Information Administration said that crude inventories rose by 4.1 million barrels last week, far higher than the boost of 1.8 million barrels that had been expected.
EnCana Corp. improved $1.03 to $55.49 and Canadian Oil Sands Trust ran ahead $1.65 to $26.70.
Talisman Energy Inc. reported net income of $455 million for the quarter ended March 31, a two per cent decrease from year-earlier profit of $466 million as lower commodity prices hit the bottom line. Its shares moved up a full dollar to $15.35.
Shares in Barrick Gold Corp. were up a nickel at $35.65 after it handed in a first-quarter profit of $371 million U.S., down from a year-earlier $514 million as the world's largest gold producer saw lower realized prices and higher cash costs.
Financials were also positive, with Manulife Financial ahead 42 cents to $20.11 and CIBC gained $1.25 to $54.90.
Shares in Eveready Inc., an Edmonton-based energy services company, soared $6.93 or nearly 200% to $10.40 after it signed a definitive $464-million deal to be acquired by Clean Harbors Inc. North America's biggest provider of environmental and hazardous waste management services.
The price tag of the cash and stock deal values the Canadian company at $11 a share or about $202 million.
Canada's largest travel company, Montreal-based Transat AT, said it is bringing its customers and employees in Mexico back to Canada and postponing any further flights to the country until at least June 1 because of concerns about swine flu. Its shares rose 39 cents to $11.00.
On the economic front, Canadian home prices fell in February from the year-ago month, led by declines in Calgary, Vancouver and Toronto, a Teranet-National Bank Financial index showed.
Prices fell for a third month, dropping 4.1% from February 2008, according to the report released today. On the month, prices fell for a sixth straight time, dropping 2% from January, the longest stretch of declines in the nine years that the index has been tracking prices in six Canadian cities.
The index has dropped 7.4% since peaking in August 2008, the statement said.
The Canadian dollar was up 1.15 cents to 83.15 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, nine ended the day ahead, with metals and mining leading the parade, advancing 5.1%, followed by utilities, zooming 1.8%, and energy stocks, up 1.5%.
Consumer staples led the four groups downward, falling 1.2%, information technology slipped 1% and telecoms were off 0.9%.
The TSX Venture Exchange surged 20.87 points to 1,013.97 while the Nasdaq Canada Index slid 7.87 points to 637.49
ON WALLSTREET
The Dow Jones Industrials average moved 168.78 points to reach closing time at 8,185.73, closing at the highest point since Feb. 9.
The S&P 500 index advanced 18.48 points to 873.64, the highest point since Jan. 28, while the Nasdaq Composite Index improved 68.28 points to 1,711.94, at the highest point since Nov. 3, 2008.
Stocks spiked even more in the first half hour after the 2:15 p.m. ET announcement, but lost some steam late in the session.
Investors found positives in the day's bleak report on first-quarter economic growth, pushing stocks higher at the open. The markets extended those gains after the Fed opted to keep the fed funds rate, a key short-term interest rate, at a historic low near zero.
In its statement, the bank gave a more upbeat take on the economy than it has recently, although the tone remained cautious. The Fed said that "although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time."
The statement also said the pace of contraction appears to be somewhat slower, a belief that has helped lift stocks over the last two months
A reading on first-quarter gross domestic product showed the U.S. economy shrank at an annualized rate of 6.1%, much steeper than the 4.7% decline analysts expected, but still narrower than the 6.3% drop in the fourth quarter.
The drop was partially due to a huge decline in inventories. Consumer spending, however, contributed 1.5 percentage points to GDP, after subtracting three points from the previous quarter's reading.
Citigroup has reportedly asked Treasury if it can pay out bonuses to certain workers, according to the Wall Street Journal. Citi has received $45 billion U.S. in federal bailout money and may need to raise more. Shares gained 6%.
Bank of America shareholders criticized CEO Ken Lewis for his handling of the company's recent purchase of Merrill Lynch. A vote has been taken at BofA's annual meeting on whether Lewis should retain his chairmanship, with results to be announced soon. Lewis will retain his CEO position.
However, shares gained 4.8% as part of a broad bank stock rally.
Wells Fargo, Goldman Sachs, Morgan Stanley and Fifth Third were among the other gainers.
Insurer Aetna reported that revenue soared 11% in the first quarter on a 9% rise in subscribers, but net income remained relatively flat. Still, profit and sales beat Wall Street's forecasts. Shares slumped 10%.
Steelmaker Arcelor Mittal said its quarterly sales fell 50% from last year on a huge decline in global steel demand. The company missed analysts' estimates by a wide margin and said its production is running at about 50% capacity.
CNNMoney.com parent Time Warner reported profit from continuing operations was little changed, but results still managed to trounce analysts' expectations. Shares were barely changed.
Dendreon shares rallied 97% in its first day of trading after saying its experimental treatment for advanced prostate cancer extended the lives of men suffering from the disease by four months. Shares were halted after the Tuesday afternoon announcement.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.09% from 3.01% Tuesday. Treasury prices and yields move in opposite directions.
U.S. light crude oil for June delivery rose $1.05 to settle at $50.97 U.S. a barrel.
COMEX gold for June delivery rose $6.90 to settle at $900.50 U.S. an ounce.
