Index Daily Change
S&P/TSX composite index 0.39% Down
Dow Jones industrial average 0.13% Gain
Standard & Poor’s 500 Index 0.07% Gain
Nasdaq Composite Index 0.33% Gain

Canada’s main stock index closed lower for a 2nd straight day yesterday as the material and energy sectors were hit hard by slipping commodity prices and a soft earnings report from U.S. aluminum giant Alcoa. Oil prices dropped for a 5th straight day. The Alcoa report raised fears of a sluggish economic recovery and commodity prices weakened as a result. Although, Canadian economic figures yesterday reinforced the view that growth is accelerating in this country. Trade data for February was stronger than expected and new-home prices rose in the same month.

While Alcoa kicked off earnings season with its 5th net loss in the past 6 quarters, Alcoa late on Monday reported revenue that failed to meet expectations, sending its stock down 3.2% yesterday. Some investors looked forward to other sectors such as banks and technology companies that might perform better. That could mean sideways trading in the short-term as the market awaits their results.

In the United States stocks eked out a small gain as investors looked ahead to earnings from big banks and tech bellwethers, even as disappointing revenue from Alcoa acted as a headwind. The Standard & Poor’s 500 index up about 40% over the past 12 months and stock market gains during the current earnings season could be minimal. Equities tend to do worse in earnings periods after making gains in anticipation of strong results. Even though the Dow closed above 11,000 again, it is poised to encounter formidable resistance ahead, according to market technicians.

After the market closed, chipmaker and Dow component Intel reported a stronger-than-expected 1st quarter profit, sending its shares up 3.8% in extended-hours trading. Intel rose 0.6% yesterday. Intel also lifted shares of rival Advanced Micro Devices (AMD) and stock index futures, suggesting Intel will boost stocks when the market open this morning. CSX Corp rose 1.3% in extended trading after the transportation company posted 1st quarter earnings that beat expectations.

S&P 500 earnings are expected to rise 37.1% in the 1st quarter from a year earlier, according to Thomson Reuters data. Corporate results scheduled for later this week include JPMorgan Chase & Co, Google Inc and Bank of America Corp (BofA).

This morning things look very good. Emerging-market stocks rose and metals & other commodities advanced as economic reports showed Asia is fueling the global economic rebound. The MSCI Emerging Markets Index increased 1%, led by a 1.5% rally in Korea’s Kospi Index after Moody’s Investors Service raised the nation’s credit ratings. Futures on the Standard & Poor’s 500 Index rose 0.3%. Aluminum reached its highest since September 2008 and nickel the most since May 2008.

Investors are gaining confidence in the global economic recovery after Singapore said growth is accelerating, Korea reported its biggest drop in unemployment in a decade and economists predicted China will report its fastest increase in gross domestic product (GDP) in almost 3 years tomorrow. Intel Corp.’s sales forecast beat analysts’ estimates, reviving optimism as the U.S. earnings season starts. In addition, JP Morgan announced earnings this morning which easily beat lofty expectations.

Regards,

Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA

SVP & Partner