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TSX advances amid mixed bag of U.S. earnings reports, positive economic data

TORONTO - The Toronto stock market closed higher Thursday as stocks continued to find lift from this week's positive Chinese and U.S. economic data, along with a generally upbeat slate of earnings news.

The S&P/TSX composite index climbed 53.87 points to 14,500.39, led by gains in energy and mining companies.

The Canadian dollar advanced amid data showing higher than expected inflation. The loonie was up 0.04 of a cent to 90.8 cents US as Statistics Canada reported that the consumer price index rose 0.6 per cent in March from the previous month, higher than the 0.4 per cent reading that economists had expected.

U.S. indexes were mixed as traders balanced a string of positive earnings reports from a number of corporate heavyweights, including Goldman Sachs, General Electric and PepsiCo, against earnings disappointments from IBM and Google.

The Dow Jones industrials was 16.31 points lower at 16,408.54, the Nasdaq gained 9.29 points to 4,095.52 and the S&P 500 index was up 2.54 points to 1,864.85.

On Thursday, General Electric posed earnings ex-items of 33 cents per share, down 15 per cent from a year ago but a penny better than analysts expected and its shares were up 1.68 per cent.

And Goldman Sachs posted quarterly earnings of $4.02 a share, beating analyst expectations of $3.45 and its shares were up 0.14 per cent.

But Google stock dropped 3.67 per cent as quarterly earnings growth faltered amid a persistent downturn in advertising prices, while IBM’s first-quarter earnings fell and revenue came in below Wall Street’s expectations amid an ongoing decline in its hardware business, pushing its shares down 3.25 per cent.

There was also some nervousness heading into the weekend even as the United States, the European Union, Russia and Ukraine reached agreement on immediate steps to ease the crisis in Ukraine.

The agreement requires all sides to refrain from violence, intimidation or provocative actions. It calls for the disarming of all illegally armed groups and for control of buildings seized by pro-Russian separatists to be turned back to authorities. The tentative agreement puts on hold additional economic sanctions the West was prepared to impose on Russia if the talks proved fruitless.

North American stocks racked up solid gains this week, partly because Chinese economic growth in the first quarter came in better than expected. Also, the Federal Reserve‘s latest regional survey showed that the U.S. economy picked up over the past two months as bitter winter weather subsided. The TSX gained 1.7 per cent while the Dow industrials ran up 2.38 per cent.

It was a positive change from the previous week when U.S. indexes sustained sharp losses as traders rotated out of expensive biotechs and technology stocks. But there are doubts about whether that rotation is complete and if more volatility could be on the way.

"The concerns remain whether or not growth stocks, particularly the hyper-growth stocks, continue to be a victim of the growth-to-value rotation," said Ben Jang, portfolio manager at Nicola Wealth Management in Vancouver.

The TSX energy sector was up 1.3 per cent as the May crude contract on the New York Mercantile Exchange rose 54 cents to US$104.30 a barrel.

May copper was up two cents at US$3.05 a pound and the base metals component climbed 0.7 per cent.

The gold sector lost about 0.9 per cent as June bullion declined $9.60 to US$1,293.90 an ounce.

The Canadian Press


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