Canada’s main stock index finished higher for a 5th straight day on Friday as firmer oil & metal prices boosted the share of resource stocks. The index added 6.3% for the week, its biggest weekly gain since mid-May. The price of U.S. crude oil rose 2.5% to settle at $63.56 a barrel on the back of a report that showed construction of new U.S. homes and building permits rose more than expected in June, signaling a potential economic recovery.
The S&P/TSX composite index closed up 0.63% while 5 of the 10 main groups were higher, with energy gaining 1.73% and materials rising 1.39%. A report this week out of China showing better than expected economic growth in the 2nd quarter helped commodities prices on hopes of stronger demand. Oil seems to have stabilized and gold prices have apparently turned around. Canadian earnings season begins in earnest next week so expect lots of new information to impact stocks.
On Friday, the United States stocks closed out their best week in 4 months on a flat note as strong earnings from IBM softened the blow of disappointing results from General Electric. IBM, the world’s largest technology services provider, boosted its profit outlook for the year. But GE and Bank of America reined in the blue-chip average’s gains as Bank of America’s soaring credit losses, along with GE’s unexpected drop in revenue, curbed recovery optimism after promising earnings and data earlier in the week. With companies such as Intel and Goldman Sachs posting strong quarterly results earlier in the week, investors had been eager to see some consistency from other bellwether names.
The Dow Jones industrial average gained 0.37% but the Standard & Poor’s 500 Index dipped 0.04% and the Nasdaq Composite Index gained 0.08%. All 3 major U.S. stock indexes recorded their best week since mid-March, as both the Dow and the S&P 500 snapped 4 week losing streaks. This week’s gains marked the resumption of the rally from March 9th, when the S&P 500 hit a 12-year closing low. For the week, the Dow rose 7.3%, the S&P 500 gained 7% and the Nasdaq climbed 7.4%.
Helping sentiment was new data that showed U.S. housing starts and building permits jumped more than expected in June, propelled by a surge in single-family home starts.
This morning, CIT Group Inc. may announce an agreement to obtain $3 billion of emergency financing from bondholders, keeping the struggling lender out of bankruptcy. The money could strengthen CIT’s finances and allow more time for the 101-year old lender to small- and mid-sized businesses to restructure its debt.
Expect some volatility and headwinds in stocks for the coming weeks as companies announce their quarterly earnings (stocks move on news).
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
