Source: The Canadian Press

The Toronto stock market closed lower Wednesday as optimism arising from a solid earnings report from tech bellwether Intel Corp. was tempered by poor U.S. retail data and lower expectations for the overall American economy.

The S&P/TSX composite index moved 52.68 points lower to 11,620.16, while the TSX Venture Exchange added 0.45 of a point at 1,384.56.

The Canadian dollar slipped 0.04 of a cent to 96.7 cents US.

The U.S. Federal Reserve said that the economy, as measured by gross domestic product, will grow between three and 3.5% this year. That’s a downward revision from a growth range in their April forecast of 3.2 to 3.7% and reflects worries about how the European debt crisis could affect U.S. growth and job prospects.

The U.S. Commerce Department reported that retail sales fell in June for the second straight month, down 0.5%. The June decline was larger than the 0.2% drop that economists had expected.

There are also indications that the pace of the Canadian economy could be faltering. The Conference Board of Canada is forecasting that the country’s economic growth will continue at a slower pace in the second half of this year and in 2011.

The think-tank says the outlook for Canada depends largely on a recovery in U.S. household spending, which remains fragile, as Wednesday’s U.S. retail report and the Fed forecast indicate.

“Our exports were good and job growth in Canada is surprisingly good,” observed Chris King, vice-president and portfolio manager at Morgan, Meighen and Associates.

“But ultimately, it’s the big elephant that counts (and) the U.S. will just work their way up slowly. This recovery will take a little bit longer due to U.S. unemployment and the debt situation.”

The news overshadowed a solid earnings report from Intel, the world’s biggest chipmaker. On Tuesday, the company posted net income of US$2.89 billion, or 51 cents per share, for the quarter — its biggest quarterly profit in a decade. The results were well above the 43 cents that analysts expected, as large corporations started buying new computers for employees. Revenue also beat expectations, coming in at US$10.88 billion.

Intel also forecast higher gross profit margins and its shares advanced 35 cents to US$21.36.

The consumer discretionary group was the weakest sector, off 1.25% with convenience store operator Alimentation Couche-Tard Inc. (TSX:ATD.B) down 52 cents at $19.98 while grocer Metro Inc. (TSX:MRU.A) gave back $1.22 to $42.70.

The TSX energy sector was down 0.69% as oil prices closed little changed after the U.S. Energy Information Administration reported Wednesday that crude inventories declined 5.1 million barrels in the week ended July 9, about double the drop that had been expected. The August crude contract on the New York Mercantile Exchange drifted 11 cents lower to US$77.04 a barrel.

Suncor Energy (TSX:SU) declined 35 cents to C$32.83 and Canadian Oil Sands Trust (TSX:COS.UN) lost 35 cents to C$27.39.

Mining stocks were also weak with the base metals sector down 0.5% as the September copper contract on the New York Mercantile Exchange lost a cent to US$3.01 a pound. Teck Resources (TSX:TCK.B) was down 38 cents at C$34.51 and Equinox Minerals (TSX:EQN) slipped eight cents to $4.22.

Gold stocks were slightly lower as the August gold contract on the Nymex lost $6.50 to US$1,207 an ounce.

New York markets were weak following the economic data.

The Dow Jones industrial average added 3.7 points to 10,366.72.

The tech-heavy Nasdaq composite index benefited from the Intel report and gained 7.81 points to 2,249.84 while the S&P 500 index dipped 0.17 of a point to 1,095.17.

Also, the release of the minutes from the last U.S. Federal Reserve meeting in June showed officials weighed whether new steps would be needed to keep the U.S. economic recovery alive.

Fed officials indicated a need to explore new options for bolstering the U.S. economy in light of Europe’s debt crisis, a volatile Wall Street, a stalled housing market and high unemployment. Earlier this year, the Fed was moving to wind down crisis-era supports.

In other corporate news, Corus Entertainment Inc. (TSX:CJR.B) had a $31.4-million profit for its fiscal third quarter, worth 39 cents per share, compared with a year-earlier loss of $145 million or $1.81 per share. The broadcaster’s revenues increased 12%. Corus shares lost 23 cents to $19.14.

West 49 Inc. (TSX:WXX) shares fell 13 cents to $1.28 after an American sports apparel retailer decided against making a bid for the Canadian sportswear firm. The stock jumped last week after Zumiez Inc. (Nasdaq:ZUMZ) said it might be prepared to top a $99-million takeover offer from Australia’s Billabong International.

Shares in money-management firm Sprott Inc. (TSX:SII) were up 30 cents, or 9%, to $3.60 after Eric Sprott said he was stepping down as chief executive of the firm he founded. The company said Tuesday that he will become chairman of Sprott Inc. and chief investment officer of Sprott Asset Management LP. The 65-year-old Sprott said it was time to work on a succession plan and he expects the move will give him more time to spend running the firm’s funds. Peter Grosskopf, who was president of Cormark Securities, takes over as CEO.

IE

Grosskopf named CEO of Sprott Inc.
July 13, 2010

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