Stock markets faded into the red Thursday after U.S. President Barack Obama announced that Chrysler will file for bankruptcy following the collapse of talks between lenders and the U.S. Treasury Department to reduce the automaker's secured debt.
Stocks had been sharply higher all morning after economic data in Canada and the U.S. raised hopes that a recovery would still be possible towards the end of the year.
The TSX composite index ended the day off 89.70 points to 9,326.61
Imperial Oil Ltd. - like its American parent Exxon Mobil - says lower prices bit into its first-quarter earnings, though a lower Canadian dollar and falling costs helped offset the decline.
Its profit plunged to $289 million from $681 million a year ago and its shares moved cents two cents lower to $42.98.
Canadian Oil Sands Trust units were down 87 cents at $25.43 after it said earnings came in at $43 million during the quarter, compared to a profit of $298 million a year ago.
The Toronto energy sector, in general, was lower as EnCana Corp. declined 73 cents to $54.76.
The financial sector rose as Manulife Financial gained 35 cents to $20.46 and National Bank rose 57 cents to $43.92.
The base metals sector was up. Shares in debt-strapped mining giant Teck Resources Ltd. were ahead 49 cents to $12.50 after the company said today it finalized an anticipated deal to sell its 40% stake in Alaska's Pogo gold property for $245 million U.S.
Denison Mines Corp. shares rose 33 cents to $2.34 after CEO Peter Farmer said the spot price of uranium will climb its way back up to $60 or $70 U.S. a pound over the next year as increasing demand and dwindling supply overcome the effects of the global financial crisis.
The gold sector faded, as Agnico-Eagle Mines Ltd. shares fell $3.73 to $51.70 as the gold miner nearly doubled its quarterly profit to $54.3 million U.S. compared with a year ago, boosted by one-time gains.
Security services provider Garda World Security Corp. posted a 2009 loss of $97.1 million on several one-time charges, reversing a year-ago $15.6 million profit. Its shares rose 11 cents to $3.28.
Utility operator Fortis Inc. reports first quarter net earnings of $92 million, up slightly from year-earlier profit of $91 million. Its shares were off 48 cents to $22.29.
Microelectronics company Gennum Corp. said it has dropped its bid to acquire Tundra Semiconductor Corp. after a higher competing offer by Integrated Device Technology Inc., a U.S. company. Gennum shares declined one cent to $5.24 while Tundra stock dipped 17 cents to $6.19.
On the economic front, Statistics Canada says the economy continued to contract in February, slipping 0.1%.
That was much less severe than the 0.7% slide recorded in January and a better showing than the 0.2% contraction that economists had expected.
Still, the agency noted that economic activity has declined by 2.4% since October of last year.
It said that a 19% rise in motor vehicle and associated parts manufacturing in February was not enough to outweigh declines in construction and in mining activities, excluding oil and gas.
Canada’s Accounting Standards Board made a "compromise" decision on mark-to-market rules that doesn’t go as far as recent changes made in the U.S., the Globe and Mail reported.
The decision gives banks and other companies new flexibility to avoid writedowns on certain assets while stopping short of the changes in the U.S., the newspaper said, citing no one. The board, which made its decision yesterday, will release details today.
The Canadian dollar was up 0.67 cents to 83.82 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, eight moved into negative country by day’s end. Gold was the biggest loser, off 3.5%, followed by materials, off 1.4% and utilities, down 0.9%.
Of the five gainers, metals and mining had the most lift, 2.7%, followed by health-care, 2% better, and industrials, ahead 1.1%.
The TSX Venture Exchange slipped 5.11 to 1,008.86 while the Nasdaq Canada Index added 21.26 points to 658.75
ON WALLSTREET
The Dow Jones Industrials average faded 17.61 points on the day, to 8,168.12
The S&P 500 index slid 0.83 points to 872.81, while the Nasdaq Composite Index improved 5.36 points to 1,717.30
Bets that the economy is not far from finding its footing have boosted stocks for nearly two months, lifting the Dow by roughly 25% since it hit 12-year lows on March 9.
Chrysler will still form an alliance with the Italian carmaker Fiat Group SpA and hopes to emerge from creditor protection in as little as 60 days.
The U.S. government, which has already poured $4 billion U.S. in loans into Chrysler, would provide up to $8 billion U.S. more to carry the company through bankruptcy
In other auto sector developments, a committee of General Motors Corp.'s bondholders has offered to take a 58% stake in the restructured automaker in exchange for their $27 billion U.S. in debt.
The bondholders say the U.S. government wouldn't take a stake in the automaker under their plan, while a union-run health care trust would own a 41% stake and current stockholders would get 1%.
GM has come out with a plan that would give the U.S. government a 50% equity stake and its shares were up 13 cents to $1.94 U.S.
Exxon Mobil Corp.'s first-quarter profit fell 58% from a year ago to $4.6 billion U.S. as the world's biggest publicly traded oil company, like the rest of the industry, saw crude and gas prices fall precipitously. Its shares were down $1.37 to $67.07 U.S.
Other oil stocks fell too, including Dow component Chevron, Halliburton and Schlumberger
Dow stock Procter & Gamble reported weaker earnings that topped estimates on weaker revenue that missed estimates.
Fellow consumer products maker Colgate-Palmolive also posted lower earnings that beat forecasts on lower revenue that missed expectations.
Starbucks reported weaker earnings after the market close Wednesday that nonetheless topped estimates.
In other company news, Bank of America said late Wednesday that Ken Lewis has been removed as chairman, but will stay on as CEO and president.
The latest batch of U.S. economic data is not supposed to show a strong turnaround. The Labor Department's weekly report on jobless claims showed initial applications for unemployment benefits unexpectedly dropped, falling by more than 16,000 to 631,000 claims last week.
Continuing claims topped 6.27 million - a new record.
The government reported that both personal income and spending fell a bit more than expected in March. Income dropped 0.3% and spending fell 0.2%. Analysts surveyed by Briefing.com expected spending to have fallen back 0.1% in March after a 0.2% rise in February. Income was forecasted to slip another 0.2%.
The Chicago PMI, a regional read on manufacturing, continued the recent trend of not-as-bad-as-expected reports. The index rose to 40.1 in April from 31.4 in March, a seven-month high and well above economists' expectations for a rise to 35.
The Labor Department's Employment Cost Index rose by 0.3% in the first quarter, the lowest rise on record and short of the 0.5% increase economists were expecting.
Even so, investors know the stock market usually rebounds before the economy does, and they do not want to miss a rally. Signs have been emerging that conditions in the United States, while not yet healthy, are becoming less dire.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.11% from 3.09% Wednesday. Treasury prices and yields move in opposite directions.
The June crude contract in New York inched up 10 cents at $51.07 U.S. a barrel.
The June bullion contract was down $9.30 to $891.20 U.S. an ounce.
