Canada’s main stock index finished lower yesterday for a 2nd straight day, in a broad retreat led by energy and materials sectors. The financial sector also turned lower heading into the end of the day, erasing the support they had given the stock market for most of the day. The energy sector jumped up and fell down throughout the day in a volatile session, eventually finishing down 1.13%, as the price of oil settled lower at $65.40 a barrel.
The S&P/TSX composite index finished down 0.79% as 9 of 10 sectors were lower, with the exception of the information technology sector, which eked out a 0.08% gain. It was the index’s 2nd straight lower close after a 6 day rally. The financial sector was a bright spot for much of the session, encouraged by strong domestic retail sales and better than expected U.S. corporate earnings.
Solid profits from technology bellwether Apple and coffee chain Starbucks overshadowed disappointing bank results in the United States. As you look to the United States, for the most part earnings are coming in positive relative to expectations. In the United States, the Nasdaq rose for the 11th straight day but disappointing bank results and declining energy shares weighed on the broader market.
The Dow Jones industrial average declined, halting a 7 day winning streak, as investors sold some of the market’s recent winners to take profits, and the S&P 500 index ended near break-even. Apple, creator of the iPod and iPhone, reported a quarterly profit that beat forecasts. The Nasdaq’s winning streak is now the longest such stretch since September 1996. Technology bellwether Apple and coffee chain Starbucks are among stocks that investors use as barometers of consumer spending trends.
The Dow Jones industrial average dropped 0.39%, the Standard & Poor’s 500 Index dropped 0.05% while the Nasdaq Composite Index jumped 0.53%. The S&P 500 briefly hit a 2009 intraday high of 959.83 but the index subsequently declined by disappointing results from banks, including Wells Fargo & Co after the world’s largest trust bank posted a 43% drop in 2nd quarter profit. The S&P 500 benchmark index for U.S. equities has still rallied 8.5% since July 10th as companies from Goldman Sachs to Intel reported earnings that beat analysts’ estimates.
Federal Reserve Chairman Ben Bernanke reiterated in testimony to the Senate Banking Committee that the U.S. economic outlook is improving, but that supportive policies would be necessary for a while to prevent rising joblessness from sapping the recovery.
This morning U.S. stock index futures advanced as EBay and Ford Motor Co. reported better than estimated results and investors speculated a report today may show home re-sales increased. EBay, owner of the most visited U.S. e-commerce Web site, released earnings and provided a forecast that topped projections. Ford posted a loss that was narrower than analysts had predicted.
Earnings beat analysts’ projections by an average of 10% for the 121 companies in the S&P 500 that reported quarterly results since July 8th, according to data compiled by Bloomberg. Analysts forecasted profits fell by an average of 33% in the 2nd quarter and will decrease 20% for the 3rd quarter, according to Bloomberg data.
More than 60 companies, or about 12% of the S&P 500, are scheduled to report earnings today.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
