Stocks on Bay Street traded higher Tuesday -- as investors cheered the latest interest rate cut by the U.S. Federal Reserve -- while energy issues gained despite a drop in oil and financial stocks recovered even after BMO announced a big share issue to bolster its capital.
The S&P/TSX composite index was up 262.28 points to 8,724.11.
Bank of Montreal fell $2.22 or 6.8 percent to $30.35 on the news of its $1 billion-plus stock offering at $30 per share. Royal Bank, which recently announced a $1-billion share issue, gained 65 cents to $34.90.
Telus Corp., Canada's No. 2 phone company, said on Tuesday it expects earnings per share to rise by up to 10 percent in 2009 and revenue gains of up to 6 percent, helped by growth in its wireless and data businesses.
On the data front -- Statistics Canada reported manufacturing sales decreased 1.8 percent in October to a seven-year low.
Also -- household net worth fell 3.2 percent in the third quarter from the second quarter, the largest percentage drop in 10 years as stock prices tumbled, Statistics Canada said on Wednesday.
Down south -- the Commerce Department reported a record low annual rate of 616,000 building permits for November. Analysts had expected 700,000 starts, according to Briefing.com. Housing starts declined to a record low annual rate of 625,000.
The Canadian dollar, meanwhile, was trading up 2.04 cents to 83.00 cents US.
BAYSTREET
Twelve of the TSX sub-groups traded higher today -- energy stocks were up 4.01 percent followed by a 3.91 percent rise in industrial issues and a 3.90 percent jump in gold stocks.
Gold futures extended gains in after-hours electronic trading after the Fed move, with gold for February delivery up $7.6 to 850.40 US an ounce.
On the downside -- health-care stocks dipped 0.39 percent.
Meanwhile, the TSX Venture Exchange rose 6.65 points to 723.46 and the NASDAQ Canada was ahead 29.69 points at 418.89.
ON WALLSTREET
U.S. stocks soared higher Tuesday, with banks fronting the surge, as the Federal Reserve axed its benchmark interest rate to a record low and said it would buy large amounts of debt and securities to flood the financial system with money.
The Dow Jones Industrial Average surged 359.61 points, or 4.2 percent, to 8924.14, and the S&P 500 gained 44.61 points, or 5.1 percent, to 913.18. The Nasdaq climbed 81.55 points, or 5.4 percent, to 1589.89.
The central bank opted to lower the federal funds rate to a targeted range of between zero and 0.25 percent. That's the lowest level on record, going back to 1954. The rate stood at 1 percent previously. Economists thought the Fed would lower the rate to 0.5 percent or possibly 0.25 percent.
All of the Dow's 30 components posted gains, fronted by the blue-chip index's financials. Citigroup Inc. gained 11.2 percent, while JPMorgan & Chase climbed 13 percent.
General Electric Co. climbed 5.7 percent after it said it would not provide further quarterly guidance beyond the coming quarter, but would maintain its annual dividend in 2009.
In company news -- Goldman Sachs announced its first quarterly loss as a public company early Tuesday. The company reported a loss of $2.12 billion, or $4.97 a share, while Wall Street analysts had predicted a loss of $3.73 a share.
Best Buy reported a 77 percent decline in third-quarter profit and announced a plan to cut capital spending by 50 percent in 2009.
In other news -- the government could announce a plan to help the troubled automakers as soon as Wednesday. The Bush Administration said last week that it would consider offering General Motors and Chrysler bridge loans from the $700 billion bailout fund Congress set aside for Wall Street.
Both GM and Chrysler have said they need financing ASAP. Ford Motor has stated it has enough money to function, but that it would like to have the option of government funds should conditions deteriorate.
Treasury prices slipped, lifting the yield on the benchmark 10-year note to 2.36 percent from 2.50 percent Monday. Treasury prices and yields move in opposite direction. The 10-year yield dipped below 3 percent in November for the first time since the note was first issued in 1962.
U.S. light crude oil for January delivery fell 91 cents to settle at $43.60 US a barrel after rallying in the morning on bets that OPEC will cut output during its meeting in Algeria on Wednesday.
