Investors sent the Toronto stock market higher Tuesday afternoon, even as strong commodities were offset by a dampened economic outlook from the Bank of Canada.
The S&P TSX Composite Index regained 86.41 points in late afternoon trade to close out at 11,629.88
The TSX base metals sector gained ground, as the September copper contract on the New York Mercantile Exchange added 6.35 cents to $3.00 U.S. a pound. Shares in Teck Resources jumped $1.20 or 3.6% to $34.29.
The gold sector rose as shares in Barrick Gold Corp. were up 29 cents to $43.70.
Financials lost turf after Wall Street giant Goldman Sachs Group Inc. reported lower trading revenue and an 83% drop in net income. Shares in Royal Bank of Canada lost nine cents to $53.54.
The energy sector added strength as shares in Encana Corp. were up 71 cents to $34.46.
In Canadian corporate news, Bombardier Inc. announced at the Farnborough Air Show in Britain that several customers have ordered a total of 10 jets worth nearly $500 million. Shares in Bombardier were up 18 cents at $4.61.
And Air Canada announced that it will grow its system capacity more aggressively this year than previously expected and disclosed a plan to refinance its debt. Canada’s largest airline now expects to boost its overall fleet capacity by between 6-7.5% this year.
The company also announced a $900-million U.S. note offering to repay some of its outstanding debt. Shares in the airline jumped 22 cents or 11.5% to $2.13.
The Bank of Canada raised the target rate for overnight loans between commercial banks a quarter point to 0.75%. The Bank rate is correspondingly 1% and the deposit rate is 0.50%.
The Bank said it expects the economic recovery in Canada to be more gradual than it had projected in its April MPR, with growth of 3.5% in 2010, 2.9% in 2011, and 2.2% in 2012, which reflects a slightly weaker profile for global economic growth and more modest consumption growth.
The Canadian dollar was 0.49 cents higher to 95.77 cents U.S.
ON BAYSTREET
All but two of the 14 TSX subgroups were higher. Global base metals climbed 3.3%, while the metals and mining group acquired 2.5% and utilities gathered 1.5%.
The two laggards were health-care, off 2.3%, and information technology, down 0.6%.
The TSX Venture Exchange eked ahead 0.99 points to 1,363.09 while the Nasdaq Canada index was up 11.07 points at 635.85.
ON WALLSTREET
In New York, equities closed higher Tuesday, recovering from steep loses earlier in the session, on optimism about quarterly earnings from Apple and speculation about possible moves by the Federal Reserve.
The Dow Jones industrial average recovered some of its might and prospered 75.53 points to 10,229.96
The S&P 500 index moved 12.23 points higher to 1,083.48. The Nasdaq composite index amassed 24.26 points to 2,222.49.
Stocks opened sharply lower after Goldman Sachs reported a big drop in quarterly profits and Johnson & Johnson lowered its full-year earnings outlook. Weaker-than-expected revenues from IBM also weighed on the market.
The tone improved in the afternoon on chatter that the Fed is considering additional steps to encourage bank lending. Ben Bernanke, chairman of the U.S. central bank, is scheduled to testify before Congress on Wednesday.
Apple is among the many companies slated to report quarterly results after the closing bell.
Investors have been focused largely on corporate financial results, with over 120 companies due to report this week.
While earnings have been relatively strong so far, investors are looking for sales and revenue growth to confirm that profits are due to improved economic conditions and not cost-cutting measures.
Concerns that the U.S. economy could dip back into recession later this year have kept the market range-bound since April. A dour report released Tuesday on initial construction of new homes in June added to the economic jitters.
Stocks ended Monday's session with gains, although economic worries tempered positive earnings results.
IBM fell 2.5% after the company reported late Monday second-quarter earnings that beat expectations, while sales growth was weaker than expected.
Goldman Sachs said profit fell 82% in the second quarter to $613 million U.S., due to a slowdown in the bank's trading business. Results were also hurt by a bonus tax in the United Kingdom and the $550-million U.S. settlement Goldman reached with the Securities and Exchange Commission. Shares gained about 2%.
Drugmaker Johnson & Johnson fell more than 2% after the company lowered its full-year earnings estimate to a range between $4.65 to $4.75 U.S. a share, compared with earlier guidance of $4.80 to $4.90 U.S. a share.
For the second quarter, J&J said it earnings rose 7% to $1.23 U.S. a share from $1.15 U.S. a share in the same period last year.
J&J also said it has received a grand jury subpoena and is cooperating with a federal investigation stemming from multiple recalls of its popular non-prescription drugs.
Harley-Davidson soared over 13% after the motorcycle maker said it earned 59 cents U.S. a share, versus expectations for 41 cents U.S. a share.
Shares of Toyota fell 1.4% after the automaker said it was cooperating with a subpoena from a U.S. federal grand jury for documents related to steering problems in its vehicles.
Economically speaking, housing starts fell to their lowest level of the year in June, down 5% to an annual rate of 549,000. But building permits showed surprise strength, climbing 2.1% to an annual rate of 586,000.
Separately, a monthly report from the Labor Department showed that unemployment eased in more than half of U.S. states in June.
A total of 39 states and the District of Columbia posted unemployment rate decreases in June, while jobless rates rose in five states and remained unchanged in six states.
Treasury prices gained ground, lowering yields on the 10-year note to 2.93% from Monday’s 2.96%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil moved forward 77 cents to $77.67 U.S.
Gold prices surged $10 to $1,192 U.S. an ounce.
