The Toronto stock market maintained a solid lead Tuesday as gold stocks surged on record high bullion prices, railway stocks gained following major acquisition activity in the United States and oil prices advanced.
Within minutes of the final bell, the S&P/TSX composite index had emerged from the dungeon to plow ahead 128.67 points, or 1.2%, to 11,007.02.
However, the TSX had lost more than 5% over the last seven sessions as investors worried about whether economic conditions can support the sharp gains racked up since March.
"The bar is being raised on what constitutes good news," said Avery Shenfeld, chief economist at CIBC World Markets.
"Three or four months ago, not bad news was good enough to lift the stock market and I think now, at current levels, the market is more demanding in terms of what it wants to see, both on corporate results and particularly on economic data."
The gold sector was ahead as the International Monetary Fund said it sold 200 metric tons of gold to the Reserve Bank of India and the American dollar lost strength. Goldcorp Inc. gained $2.53 to $42.67 while Barrick Gold Corp. was up $2.48 to $41.87.
The TSX industrial sector was ahead, after Warren Buffet's Berkshire Hathaway said it was buying Burlington Northern Santa Fe in a deal valuing the railway at $34 billion U.S.
Berkshire Hathaway Inc. already owns a stake of about 22% in Burlington Northern, and says it will pay $100 U.S. a share for the rest of the company. That is a 32% premium over Burlington's closing price Monday. The deal sent Canadian railway stocks higher with Canadian National Railway ahead 78 cents to $53.36 while Canadian Pacific Railway advanced $1.44 to $48.66.
The energy sector was slightly lower even as oil prices reversed early losses. In the TSX, Suncor Inc. declined 60 cents to $34.99.
The base metals sector was ahead as the December copper contract on the Nymex advanced 0.3 of a cent to $2.948 U.S. a pound. HudBay Minerals gained 61 cents to $14.23.
Among consumer discretionary stocks, Shaw Communications was down 25 cents to $19.23. Financial stocks were shaky with Royal Bank down 31 cents to $54.57.
On the Canadian earnings front, Talisman Energy Inc. saw its profits plunge in the third quarter as falling commodity prices and lower production output took their toll on earnings. The company reported a net income of $30 million or three cents per share, a significant drop from a year-ago profit of $1.4 billion or $1.40 per share.
Talisman revenue was $1.5 billion, down from $2.7 billion in the same period last year and its shares declined 10 cents to $18.23.
Increased gold production, combined with higher metal prices, helped Northgate Minerals Corp. narrow its losses in the third quarter as revenues rose. Northgate posted a net loss of $8.6 million, an improvement from a year-ago net loss of $29.4 million. Quarterly revenues totaled $120.2 million, up from $99.3 million a year ago and Northgate shares gained 14 cents to $2.93.
Groupe Aeroplan Inc. the loyalty program company spun off from Air Canada, is expanding its international business with the $188-million purchase of Carlson Marketing, a U.S.-based customer-loyalty company that also has a presence in Europe, Asia and the Middle East. Its shares were off six cents at $8.84.
The Canadian dollar gained 0.85 cents to 93.60 cents U.S.
ON BAYSTREET
All but two of the 14 TSX subgroups were higher on Tuesday, thanks mostly to the 6% surge by gold. Materials jumped 3.7%, while industrials were 1.7% to the good.
The two losing groups were consumer discretionaries, off 0.4% and telecoms, sliding a mere 0.1%.
The TSX Venture Exchange galloped ahead 35.10 points to 1,324.72, while the Nasdaq Canada index headed upwards 36.33 points to 646.40.
ON WALLSTREET
In New York, stocks were mixed Tuesday afternoon as investors mulled improved auto sales, surging commodity prices and Warren Buffett's buyout of railroad Burlington Northern Santa Fe.
The start of the Federal Reserve's two-day policy meeting and some bearish news in the financial sector were also in play.
The Dow Jones Industrials shook off its lows of the day, but was still 17.53 points in the red at 9.771.91. The S&P 500 index regained 2.53 points of strength to 1,045.41. The Nasdaq composite index gained 8.12 points to 2,057.32.
The central bank's two-day policy meeting got underway Tuesday, with a statement due Wednesday afternoon.
The Fed is widely expected to hold the fed funds rate, a key bank lending rate, at historic lows near zero. As always, investors will be attuned to what the Fed says about the economic outlook in its statement.
The Fed could also provide hints as to when it might start withdrawing some of the trillions in stimulus it put into the system over the last year to temper the impact of the financial crisis.
The bank is not expected to boost interest rates until some time next year.
The Dow Jones Transportation average surged 5.2% after Warren Buffett's Berkshire Hathaway said it will buy railroad operator Burlington Northern Santa Fe. Burlington shares surged 28%.
In other merger news, Stanley Works said late Monday that it would buy Black & Decker in a $4.5 billion U.S. all-stock deal. Stanley Works shares gained 4% and Black & Decker gained 6%.
MasterCard reported higher-than-expected quarterly earnings, reversing a year-ago loss. The credit card processor also reported higher quarterly revenues that topped estimates.
Looking forward, MasterCard said that fiscal-year 2009, 2010 and 2011 revenue growth will come in shy of the long-term objective of 12% to 15%. That sent shares lower Tuesday morning.
Swiss bank UBS reported a bigger quarterly loss that was worse than expected Tuesday and also issued a cautious outlook. Shares fell 3.6%.
Royal Bank of Scotland Group said it will sell its insurance unit and some branches as it receives an additional 25.5 billion pounds, or $41.6 billion, in aid from the U.K. Treasury.
RBS shares fell 5%. Lloyds Banking Group will also receive over $9 million in aid.
Initially, the banking sector woes weighed on a variety of bank shares, lowering the KBW Bank index by 1%. But the index erased losses and turned higher in the afternoon.
Most major automakers reported that sales bounced back in October following a weak September, as more cars became available.
Among the standouts: Ford Motor said sales rose 3% versus a year ago, topping forecasts for a decline of 3%. Sales also jumped 21% from September.
Toyota Motor reported sales that were pretty flat versus a year ago, but that was better than the decline of 6% that analysts expected. Results were also up 21% from September.
But GM said October sales rose 5% versus a year ago, short of expectations.
Dow component Johnson & Johnson said it is cutting 7% of its global workforce as part of a cost-cutting plan that could save the company up to $1.7 billion U.S. by 2011. Shares lost less than 1%. Shares were barely changed.
Intel shares slumped 3% after Morgan Stanley cut its rating on the company to "equal weight" from "overweight."
Stocks managed gains Monday at the end of a choppy session, but the selling resumed Tuesday. The S&P 500 has tumbled more than 5% over the last two weeks on worries that the massive 2009 stock rally has outpaced the still-germinating recovery.
Treasury prices lost ground, raising the yields for the benchmark 10-year note to 3.47% from Monday’s 3.43%. Prices and yields move in opposite directions.
The price of a barrel of oil picked up $1.47 to $79.39 U.S.
Gold prices gained $31 to $1,085 U.S. an ounce.
