The Toronto stock market was sharply lower Thursday, despite solid earnings and dividend hikes from three big Canadian banks as positive U.S. economic news raised doubts about whether the U.S. Federal Reserve will take more measures to boost growth.
The S&P/TSX Composite index stumbled 123.14 points, or 1%, to close the session at 11,886.65
The Canadian dollar backtracked 0.29 cents to 100.78 cents U.S.
The TSX found limited support from the financial sector in the wake of reports from Royal Bank, TD Bank and CIBC.
Royal Bank’s earnings grew to $2.24 billion or $1.47 per share, partly on strength in its Canadian consumer banking operations, from $1.29 billion a year ago. Excluding certain items, the bank earned $1.31 a share in the quarter against analyst estimates of $1.18. RBC also raised its quarterly dividend by 5% to 60 cents per share and its stock rose 39 cents to $54.99.
TD Bank’s quarterly net income rose to $1.7 billion, or $1.78 per share, from $1.49 billion a year ago. After adjustments, the bank’s net income was $1.82 billion or $1.91 per diluted share, seven cents better than estimates. TD also upped its dividend, which will rise five cents to 77 cents but its stock lost 93 cents to $80.59.
CIBC shares also sank $1.05 to $75.33, despite a big increase in net income in the quarter ended July 31 to $841 million from $591 million for the same period last year. Excluding one-time items, the bank earned $2.06 a share, a dime better than forecast. CIBC also announced a quarterly dividend increase of four cents a share.
National Bank is scheduled to report its results after markets close and its shares dumped 78 cents to $75.15.
Both Bank of Montreal and Scotiabank both handed in earnings which beat expectations on Tuesday.
What’s more, Scotiabank announced after the market close Wednesday that it has reached an agreement to buy ING Bank of Canada from Netherlands-based parent ING Group for $3.13 billion in cash.
The deal is expected to result in a net investment by Scotiabank of $1.9 billion, after deducting the excess capital currently at ING Direct. Scotiabank also announced a public offering of 29 million common shares at $52 — for gross proceeds of $1.5 billion — to fund the acquisition. Its shares closed Thursday at $52.21, up $1.39.
Elsewhere on the TSX, base metal stocks declined even as September copper rose four cents to $3.48 U.S. a pound following four days of losses. Teck Resources declined $1.28 to $27.21.
And Scotiabank announced after the market close Wednesday that it has reached an agreement to buy ING Bank of Canada from Netherlands-based parent ING Group for $3.13 billion in cash.
The energy sector was down with Suncor Energy fell 46 cents to $30.65.
The gold sector was slightly higher as Goldcorp Inc. slid six cents to $39.20.
On the economic slate, Statistics Canada reported that this country’s current account deficit expanded $5.9 billion to a seasonally-adjusted $16.0 billion in the second quarter, mainly on lower exports and higher imports of goods.
ON BAYSTREET
The TSX Venture Exchange capsized 11.20 points to 1,217.96. The Nasdaq Canada erased 4.31 points to 340.53
All 14 Toronto subgroups were lower on the day, weighed mostly by metals and mining, down 2.7%, global base metals, off 2.1%, and energy, sliding 1.4%.
ON WALLSTREET
U.S. stocks fell Thursday as a string of positive economic reports dimmed hopes that Federal Reserve Chairman Ben Bernanke would announce new stimulus on Friday.
The Dow Jones industrial average let go of 106.77 points to close at 13,000.71.
The S&P 500 index faltered 10.68 points to 1,399.81, and the tech-heavy Nasdaq Composite Index was lower by 32.47 points to 3,048.71.
The Nasdaq and S&P 500 were being dragged lower by Sears Holdings, which is getting kicked out of the S&P 500 next week. LyondellBasell, which manufactures chemicals and refines crude oil, will replace Sears, when it leaves the S&P 500 after the closing bell on Sept. 4.
Pandora shares jumped nearly 22%, as the music streaming service said it broke even in its most recent quarter.
Barclays named Antony Jenkins as the bank's new chief executive Thursday morning. Jenkins currently leads Barclays retail and business banking business. Former Barclays CEO Bob Diamond resigned in July amid a scandal over the manipulation of Libor rates. Shares of the bank were edged lower.
Same-store sales data from several leading retailers, including Macy's, Costco Wholesale, Target and Gap Inc exceeded expectations.
A voluntary recall of Mr. Coffee Single Cup Brewing System Units prompted Green Mountain Coffee Roasters Inc to clarify that the recall will not have an impact on its Keurig brewers. Despite the fact that the recall will not affect Green Mountain's brand, shares of the company fell by nearly 4% Thursday.
Analysts said a steady string of positive economic indicators, including a report that the U.S. economy grew slightly faster than initially reported and a housing market recovery, is dashing expectations that Bernanke will come out strong on stimulus during his Jackson Hole speech.
Thursday's jobless claims report, while missing forecasts, wasn't as bad as it could have been. And a separate report showed both personal income and spending rose in July.
Economically speaking, the U.S. Labor Department reported that number of Americans filing for first-time unemployment totaled 374,000 during the week ending August 25, unchanged from the previous week's revised figure. Claims were expected to total 370,000, according to a survey of analysts by Briefing.com.
The Bureau of Economic Analysis said personal income increased $42.3 billion U.S., or 0.3%, in July, in line with Briefing.com's consensus.
Personal consumption expenditures increased $46 billion U.S., or 0.4%, for the month. That was slightly below the 0.5% increase expected by economists polled by Briefing.com.
The price on the benchmark 10-year U.S. Treasury gained ground, pushing the yield down to 1.62% from 1.66% late Wednesday. Treasury prices and yields move in opposite directions.
Oil prices for September delivery fell 72 cents to $94.77 U.S. a barrel.
Gold futures for December delivery lost $5.80 to $1,599.30 U.S. an ounce.
