Poorly received earnings reports from two influential Canadian insurers and fresh signs of slow job growth in the United States combined to send the Toronto stock market lower on Thursday.
The S&P TSX Composite Index ended the day off 70.28 points, to 11,774.77
Shares in Manulife Financial Corp. fell almost 11.4%, or $1.82, to $14.18 on a heavy trading volume of almost 20 million shares after the insurance giant booked a huge $2.4-billion loss on lower equity markets and interest rates. That compared with net income of $1.8 billion in the year-earlier period.
Sun Life Financial Inc. reported Wednesday after the close that earnings came in at $213 million compared with profits of $591 million a year ago.
Sun Life also said its total adjusted revenue in the quarter fell to $5.75 billion from $6.2 billion a year earlier and its shares fell $1.39 or 4.9% to $27.21.
The Canadian earnings story was more positive with BCE Inc., the country’s largest telecommunications company boosting its annual dividend 5% to $1.83 a share. The company reported that quarterly earnings came in at $590 million, up 71% from a year earlier.
BCE added that it sees 2010 revenue growth at its main subsidiary, Bell Canada at between 2-3%, higher than its previous estimate of 1-2% and its shares rose 62 cents to $32.22.
HudBay Minerals Inc. fell 79 cents to $13.16 even as it said that its gold business could soon rival mid-tier producers of the precious metal as it fast-tracks development of a key deposit in northern Manitoba that could double its production.
Among gold issues, Kinross Gold faded two cents to $16.07.
In the oil patch, Suncor Energy fell 32 cents to $34.19 while Canadian Natural Resources rose 23 cents to $36.65.
In other earnings news, Air Canada posted a net loss of $203 million in the second quarter on deeper foreign exchange losses, compared with net income of $155 million a year ago. Since Air Canada operates around the world and collects much of its revenues in U.S. dollars and foreign currencies, a stronger loonie reduces top-line revenues on its books.
Operating revenues increased to $2.63 billion from $2.33 billion, however, Air Canada shares dropped eight cents to $2.22.
WestJet Airlines Ltd. shares gained two cents to $13.01 as the carrier reported a second-quarter profit of $21 million, more than doubling its year-ago net earnings as revenue increased 15%.
The airline said it believes the Canadian economy "needs to rebound further before it can support more new domestic capacity growth."
Biovail Corp. shares gained 38 cents to $23.08 after the drug company said that net income was nearly $34 million U.S. in the second quarter, up 41% from the same time last year. Increased pharmaceutical sales and royalties boosted revenue to $238.8 million U.S.
In economic news, Statistics Canada said the value of overall building permits totaled $6.6 billion in June, up 6.5% from May and a 24.9% increase from June 2009. Economists were expecting an increase of only 1.8%, following the 10.8% decline reported in May.
The Canadian dollar picked up 0.11 to 98.31 cents U.S.
ON BAYSTREET
Nine of the 14 TSX subgroups finished the day down. Financials took the heftiest hit at 2.2%, while metals and mining stocks were down 1.8% and global base metals slid 1.1%.
The five gainers were led upwards by telecoms’ 1% hike, a 0.8% jump by health-care issues and an improvement of 0.6% by industrials.
The TSX Venture Exchange was positive, however, by 5.61 points to 1,459.07 while the Nasdaq Canada index fell back 7.10 points to 626.48.
ON WALLSTREET
In New York, stocks pared earlier losses Thursday, drifting near session highs after trading in a narrow range for most of the session, as investors focused on the outlook for the job market.
The Dow Jones industrial average fell just 5.27 points shy of breakeven to 10,674.98
The S&P 500 index faded 1.43 points to 1,125.81, while the tech-rich Nasdaq composite index eased 10.51 points to 2,293.06.
The retreat came as investors braced for the Labor Department's monthly jobs report Friday. The report, one of the most closely watched on Wall Street, is expected to show the U.S. economy lost jobs in July for the second month in a row.
Wall Street has been focused on the job market for signs the economic recovery, which appears to be losing steam, can be sustained. Consumer spending, the main driver of U.S. economic activity, is closely linked to unemployment.
Reports on the job market this week have been mixed. The government said Thursday that the number of Americans filing first-time claims for unemployment insurance rose last week to a three-month high. But a payroll processing firm said Wednesday that private sector rolls grew more than expected last month.
Also weighing on stocks, the nation's top retailers reported July sales growth that largely missed analysts' expectations, though certain pockets remained strong.
Guarded optimism about the job market helped support stocks Wednesday, but gains were slight. The Dow added 0.4% and the broader S&P 500 increased 0.6%.
The choppy action this week came after the market rallied in July. Better-than-expected corporate earnings helped support the market as concerns about the debt crisis in Europe eased last month.
Target said sales rose 3.8% last month, driven by apparel purchases, while electronics and other discretionary items remained soft. Shares were up more than 2%.
Wholesale discounter Costco reported a 6% increase in sales, slightly higher than the 5.5% that had been expected. Excluding the impact of higher gas prices and favorable foreign exchange rates, however, sales rose 4% in the month. Shares fell 1.7%.
Teen stores The Buckle and Hot Topic were two of the worst performers, reporting deep declines in sales for the month of around 9%, But two other teen apparel chains -- Zumiez and Abercrombie & Fitch -- surprised analysts with much stronger-than-expected sales.
On the economic front, weekly jobless claims figure unnerved investors a bit as it comes ahead of Friday's monthly jobs report, which economists expect to show the U.S. economy lost 87,000 jobs in July.
The number of Americans filing for initial unemployment claims climbed 19,000 to 479,000 in latest week. That marks the highest figure in three months and compares with an upwardly revised 460,000 the previous week, the Labor Department said.
Economists surveyed by Briefing.com had expected 455,000 Americans filed first-time jobless claims last week, down from 457,000 the previous week.
The reading comes ahead of Friday's much-anticipated July jobs report from the Labor Department.
Elsewhere, top U.S. retailers reported mixed sales for July as the back-to-school shopping season got off to a sluggish start.
Sales tracker Thomson Reuters, which looks at monthly same-store sales for 28 chains, said that July sales were up 2.9%, just below the 3.1% growth expected by analysts.
Treasury prices picked up steam, lowering yields on the 10-year note to 2.92% from Wednesday’s 2.95%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil was 43 cents lower to $82.04 U.S.
Gold prices eked out a two-dollar gain to $1,198 U.S. an ounce.
