Index Daily Change
S&P/TSX composite index 0.85% Drop
Dow Jones industrial average 0.94% Gain
Standard & Poor’s 500 Index 1.12% Gain
Nasdaq Composite Index 1.58% Gain

Canadian stock markets jumped yesterday as bank shares led a strong advance to close at its highest level in nearly 19 months, encouraged by forecast-beating results from U.S. bank JP Morgan. Upbeat U.S. economic data and firmer commodity prices played supporting roles in the rise.

The index’s financial group led the charge, up 2.03%, with all five big banks scoring gains of 2% or more as investors anticipated results similar to JPMorgan’s at other U.S. banks, a good omen for Canadian bank results. Sentiment was further lifted by stronger March retail sales in the United States and by better than expected results from tech heavyweight Intel from Tuesday’s closing bell.

In the United States stocks advanced a 5th straight day as stronger-than-expected corporate results and March retail sales pushed the S&P 500 past 1,200 for the first time in 18 months. There were fairly high expectations for both JPMorgan and Intel, so these beats show how much things are improving

Also boosting sentiment were March retail sales, which rose 1.6%, the Commerce Department reported, beating expectations for a 1.2% increase.

After the market’s close, Yum Brands Inc., which operates Taco Bell, Pizza Hut and other restaurant chains, reported adjusted 1st quarter earnings that beat expectations, sending the stock up 2.9% in extended trading.

A moderate U.S. economic recovery is likely to warrant very low interest rates for a long time, Federal Reserve Chairman Ben Bernanke said. Refusing to rule out the risk of a “double-dip” recession, Bernanke said inflation is not an immediate concern, giving the Fed room to maintain its highly stimulative policies. “The Federal Open Market Committee has stated clearly that they currently anticipate that very low, extremely low rates will be needed for an extended period,” Bernanke also said yesterday. However, he stressed that this commitment was based upon certain conditions in the economy, including underused productive capacity, high unemployment and anchored inflation expectations.

This morning stocks point down by a marginal amount and commodity prices have also given up some of their recent gains by a marginal amount. The Canadian dollar which closed above par with the U.S. dollar yesterday for the 1st time since July 2008 continues to trade above par today.

Regards,

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

SVP & Partner