Toronto market moves lower despite rosy economic data as commodity prices sink

TORONTO – The Toronto stock market was squarely in the red at midday Thursday as commodity prices lost ground on lingering “fiscal cliff” fears despite some data painting a relatively rosy picture of the North American economy.

The S&P/TSX composite index was down 66.76 points at 12,336.87, while the TSX Venture Exchange was down 5.73 points at 1,170.79.

Wall street was mostly lower despite some largely positive messages on the state of the economy. The Dow Jones average shed 11.63 points to 13,240.34, the Nasdaq moved 2.92 points lower and the S&P rose 0.58 points to 1,436.39.

“We got the good news on both sides (of the border) … but the big thing is the fiscal cliff worries are overshadowing the positive economic data,” said Jennifer Dowty, portfolio manager for Manulife Asset Management.

“It appears like we’re going to go down to the wire on this one.”

Investors remain focused on budget talks in Washington. Republican lawmakers were advancing a bill that would raise taxes on people earning over $1 million a year, but President Barack Obama has threatened to veto it.

After a week of taking baby steps toward a compromise, Obama threatened Wednesday to veto a new plan floated by John Boehner, speaker of the Republican-controlled Congress.

“If you get any sort of indication that perhaps negotiations are advancing and we get to any sort of agreement then the market will rally on that,” Dowty said.

“It’s very predicated on any news and that’s why you’re seeing heightened interday volatility as well.”

The Canadian dollar was up 0.05 of a cent at 101.25 cents US as commodities prices fell but Statistics Canada released some positive data on retail sales and payrolls.

Commodity prices were lower with the February oil contract down 29 cents to US$89.69 a barrel and February gold futures down $29.30 to US$1,638.40 an ounce. Copper prices shed seven cents to US$3.54 a pound.

Statistics Canada said average weekly earnings of non-farm payroll employees rose to $909 in October, up 0.9 per cent from September.

On a year-over-year basis, earnings were up 2.8 per cent. That reflected a number of factors, including wage growth and changes in the composition of employment by industry as well as the average number of hours worked.

Statistics Canada also reported retail sales edged up 0.7 per cent to $39.4 billion in October, the fourth straight monthly increase. In volume terms, retail sales increased 0.3 per cent, with eight of 11 subsectors reporting gains.

The U.S. economy grew at an annual rate of 3.1 per cent over the July-September quarter as consumers spent more and state and local governments added to growth for the first time in nearly three years. But the economy is likely slowing in the current quarter.

The U.S. Commerce Department’s third and final estimate Thursday of growth for the July-September quarter was revised up from its previous estimate of a 2.7 per cent annual growth rate.

However, the number of Americans applying for unemployment benefits rose last week by 17,000, reversing four weeks of declines. The Labour Department reports that a seasonally adjusted 361,000 people sought unemployment aid the week ended Dec. 15, up from a revised 344,000 the week before.

Meanwhile, sales of previously occupied homes in the United States jumped to their highest level in three years last month, bolstered by steady job gains and record-low mortgage rates.

The National Association of Realtors said Thursday that sales rose 5.9 per cent to a seasonally adjusted annual rate of 5.04 million in November. That’s up from 4.76 million in October.

Traders also took in news that IntercontinentalExchange Inc. has signed a friendly agreement to buy NYSE Euronext for about $8.2 billion in cash and stock, a deal that would create an industry giant that includes the New York Stock Exchange and other securities markets.

In Canadian corporate news, Bombardier Inc. (TSX:BBD.B) has a firm deal to sell at least 10 of its new CSeries passenger jets to AirBaltic, which has an option to buy an additional 10 planes. The Latvian airline’s firm order has a list value of US$764 million. The deal could be worth up to US$1.57 billion if AirBaltic fully exercises options to buy an additional 10 Bombardier CS300s.

It’s the second major announcement regarding the new-generation CSeries planes by the Montreal-based aerospace company this week. Bombardier said Thursday that an unidentified airline based in the Americas had signed a letter of intent to buy 12 to 30 CSeries planes, worth up to US$2.08 billion. Shares added nine cents to $3.66.

After markets close Thursday, traders will get the last peek into RIM’s (TSX:RIM) financials before it releases its much anticipated new line of smartphones in the new year. Shares were up 10 cents to $13.59.

Analysts will be closely watching the company’s cash volume and subscriber numbers after the BlackBerry-maker surprised in the last quarter with better than expected numbers on both fronts.

RIM has already said it expects to report an operating loss in its most recent quarter. Analysts are expecting a quarterly loss of 32 cents per adjusted share on revenue of $2.6 billion.