The TSX will likely open higher this morning and add to sharp gains recorded yesterday as oil prices continue to rise with the potential to support the resource heavy index. The sector is 22% of the overall index and was up 3% yesterday.
Oil has risen almost a dollar this morning to $44 a barrel, supported by wintry weather and OPEC supply curbs. Stocks jumped yesterday, rebounding from a two month low, after a surprisingly healthy earnings report from IBM fueled optimism that technology may fare better than other sectors during the recession.
Financial stocks outperformed as well on the strength of earnings surprises from Northern Trust and PNC Financial Services. This helped the sector recapture some of Tuesday’s massive losses that dropped the financial sector to a 14-year low in the United States/globally (the financial index was up 14% after dropping 17% in the United States the day before).
Technology shares may get a boost for a 2nd day today after Apple reported quarterly profit that beat Wall Street estimates after the bell and gave an outlook for its 2nd quarter. Apple’s stock rose 10% in extended trade, helping to lift stock futures.
Yesterday morning stock markets shrugged off a brief sell off after Treasury Secretary nominee Timothy Geithner faced tough questioning at his confirmation hearing before a Senate committee. Hearings on Geithner’s appointment attracted the stock market’s attention for much of the day as he is seen as President Barack Obama’s point man in battling the economic crisis. As the president of the Federal Reserve Bank of New York since 2003, Geithner is expected to hit the ground running if confirmed as Treasury secretary. The Senate Finance Committee is scheduled to vote on Geithner’s nomination today.
The Dow Jones industrial average jumped 3.51%, the Standard & Poor’s 500 Index jumped 4.35% and the Nasdaq Composite jumped 4.60%. The rise marked the Dow’s largest point and percentage gain since December 16, 2008, but the index remains down 6.3% month-to-date.
People are excited because financials are valued so low at this point. It’s the mentality that they can’t get any lower, but they’ve proven time and time again that they can (at some point they do have to bottom but…. when?). A day after his historic inauguration, Obama met with his economic advisers, who are working with the Democratic led Congress on an $825 billion fiscal stimulus package.
Things are looking good overseas this morning advancing strongly but stocks have given up some of those gains and U.S. futures are mixed with technology shares looking to rally but the broader market is looking to start the day down slightly. New housing starts and permits tumbled to a record low in December. Data showed this morning an accelerated downward spiral that has left the economy mired in a recession. Housing starts fell 15.5% to a seasonally adjusted annual rate of 550,000 units in the U.S., the lowest on record, from an upwardly revised rate of 651,000 units in November, the Commerce Department said. That was the biggest percentage drop since January 2007, when housing starts fell 16.2% (year over year new housing starts are down more than 50%).
Things are looking a little more optimistic but it will take some time for things to settle down.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
