Miners push TSX higher, Bombardier plunges on CSeries launch delay
Malcolm Morrison, The Canadian Press
Published Thursday, January 16, 2014 6:16AM EST
Last Updated Thursday, January 16, 2014 5:20PM EST
The Toronto stock market racked up a solid advance Thursday, due in large part to a jump in the mining sector.
The S&P/TSX composite index closed up 59 points to 13,831.58, weighed down in part by Bombardier (TSX:BBD.B) after the transport giant said that its flagship new airliner will be going into service later than expected.
Bombardier (TSX:BBD.B) shares plunged 35 cents or 7.74 per cent to $4.17 after the company announced the delay concerning its new CSeries aircraft. Volume was very heavy at 35.7 million shares, about seven times the issue's daily average of about five million.
The aircraft builder said that the CS100 won't be going into service until the second half of 2015, while the larger CS300 will go into service about six months later. The first CSeries planes were previously expected to be ready for service late this year or early in 2015.
"It's hard to know what the cause of the delay is," said John Stephenson, portfolio manager at First Asset Funds.
"There's a cash-burn issue associated with this delay and whether or not they have to end up funding it through an equity issue is some of the worry."
The Canadian dollar rose 0.16 of a cent to 91.53 cents US.
U.S. indexes were mainly lower amid earnings reports from the American banking sector and data showing a continuing decline in jobless insurance claims and tame inflation.
The Dow Jones industrials fell 64.93 points to 16,417.01, the Nasdaq gained 3.81 points to 4,218.69 and the S&P 500 index slipped 2.49 points to 1,845.89.
Goldman Sachs turned in fourth-quarter earnings per share of US$4.60, higher than the $4.22 that analysts had forecast. Revenue came in at $8.78 billion versus the $7.713 billion that had been expected but its stock lost early momentum and turned down $3.16 to $175.59.
Citigroup fell $2.41 to US$52.58 as the bank posted earnings per share ex-items of 82 cents versus the 95 cents that analysts had forecast. Revenue was $17.94 billion, weaker than the $18.18 analysts had expected.
After the bell, chip giant Intel posted quarterly earnings of 51 cents a share, a penny higher than forecast. Revenue of $13.83 billion beat forecasts of $13.72 billion but it disappointed on revenue outlook and its shares fell 2.2 per cent in after-hours trading.
On the economic front, the U.S. consumer price index rose a slight 0.3 per cent in December, translating into an annualized rate of 1.5 per cent.
And the U.S. Labor Department said that claims for jobless benefits declined last week by 2,000 to 326,000, which was in line with expectations.
This was the first glimpse of the job market since the release last Friday of a disappointing employment report that showed U.S. job creation coming in at 74,000, far less than the 200,000 that had been expected.
That data raised a fresh round of questions about how the Federal Reserve will proceed on further cutting back on its massive monthly bond purchases, which have kept long-term rates low and encouraged a strong rally on equity markets.
The Fed has cut $10 million from its monthly bond purchases, which fall to $75 billion, but said further tapering depended on the strength of the economy, particularly job creation.
The Bombardier announcement helped push the industrial segment down almost one per cent. Railway stocks also declined and Canadian National Railways (TSX:CNR) fell $1.09 to C$58.64 while Canadian Pacific Railway (TSX:CP) lost 73 cents to $163.52.
The metals and mining sector led advancers, up 4.37 per cent even as March copper declined two cents to US$3.34 a pound. Teck Resources (TSX:TCK.B) gained $1.19 to C$28.51 while Thompson Creek Metals advanced for a third day after an upgrade by Bank of America/Merrill Lynch. Its stock advanced 12 cents or 3.8 per cent to $3.28 after having risen 12 per cent Wednesday and 18 per cent Tuesday.
The energy sector was ahead 0.73 per cent as the February crude contract on the New York Mercantile Exchange moved down 21 cents to US$93.96 a barrel. Birchcliff Energy (TSX:BIR) jumped 86 cents or 11.36 per cent to C$8.43.
February bullion climbed $1.90 to US$1,240.20 an ounce and the gold sector rose about 0.7 per cent. Iamgold (TSX:IMG) climbed seven cents to C$4.25 .
In other corporate news, Best Buy shares plunged 28.6 per cent to US$26.82 in New York as it said Thursday that a key sales barometer fell during the holiday shopping season. Best Buy Co. said comparable store sales dipped 0.8 per cent for the nine weeks ended Jan. 4, but that was better than the 1.7 per cent decline in the prior-year period.