Index Daily Change
S&P/TSX composite index 0.23% Drop
Dow Jones industrial average 0.08% Gain
Standard & Poor’s 500 Index 0.18% Gain
Nasdaq Composite Index 0.16% Gain
Canada’s main stock market ended down slightly yesterday, pulling back from an 18-month high as initial optimism over a Greek debt deal faded, while retreating metal prices pulled down mining shares. The stock market charged to its highest level since September 2008 early in the day after the Euro zone finance ministers agreed on a 30 billion euro ($40.5 billion U.S.) rescue package for Greece.
The materials sector fell by 1.0%, led by retreating gold companies. Canadian Oil Sands Trust which owns 37% of the huge Syncrude oil sands project, jumped by 5% after Chinese state-owned company Sinopec said it will buy a 9% stake in the project from CononcoPhillips for $4.65 billion.
In the United States the Dow industrials closed above 11,000 for the 1st time in almost 19 months as expectations of solid 1st quarter earnings spurred buying in financial, energy and industrial sectors. Even so, some investors said stock prices already reflect lofty expectations for 1st quarter results, with both the Dow and the S&P 500 near 19-month highs.
The Dow closed above 11,000 after briefly topping that level on Friday for the 1st time since September 2008. The S&P 500, which is up 7.2% since the start of the year, rose to within 1 point of the 1,200 level, a critical resistance level.
Aluminum company Alcoa gained 1.3% on the day, making it one of the Dow’s top boosts on a day when aluminum prices touched an 18-month high. After the market close Alcoa kicked off the earnings reporting period posting a profit of 10 cents per share. This matched analyst consensus views on the company. Alcoa shares were little changed in after-hours trading.
In a sign of underlying optimism about the market’s immediate prospects, the Chicago Board of Options Exchange (CBOE) Volatility Index (VIX), a key measure of investor fear, hit its lowest close since July 19, 2007, closing at 15.58. 1st quarter earnings for S&P 500 companies are expected to rise 37.1% from a year ago, marking the 2nd straight positive quarter for earnings since 2007, according to data from Thomson Reuters.
This morning stocks and commodities fell, with oil declining for a 5th day, as Alcoa reported sales and China damped speculation of an imminent revaluation of the yuan.
The MSCI World Index of 23 developed nations’ stocks fell 0.2%. Futures on the Standard & Poor’s 500 Index lost 0.2% and Alcoa slid 3% in early New York pre-market open trading. An auction of Greek Treasury bills drew more demand than at a previous sale in the government’s 1st offering since winning an aid package from the European Union.
Investors are not disputing if there is going to be a recovery, but it’s the question of magnitude, that has people a little bit cautious. Investors are waiting for evidence earnings are sustainable beyond the benefits of stimulus measures.
Intel Corp. reports results after the close today, followed this week by JPMorgan Chase & Co., Bank of America and General Electric.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
