Techs push TSX slightly lower, Sears Canada rises as U.S. parent mulls sell-off
A man watches an electronic stock indicator of a securities firm in Tokyo, Tuesday, May 13, 2014. (AP / Shizuo Kambayashi)
Malcolm Morrison, The Canadian Press
Published Wednesday, May 14, 2014 5:37AM EDT
Last Updated Wednesday, May 14, 2014 4:34PM EDT
TORONTO -- A late-day sell-off in the tech sector helped push the Toronto stock market slightly lower Wednesday.
The S&P/TSX composite index slipped 6.08 points to 14,673.73 as rising commodity prices lifted miners and traders considered a potential major shift in the Canadian retail landscape. The Canadian dollar rose 0.23 of a cent to 91.89 cents US amid general U.S. dollar weakness.
U.S. retailer Sears Holdings Corp. (Nasdaq:SHLD) is considering selling its 51 per cent interest in Sears Canada (TSX:SCC) as the retailer continues with efforts to turn around its business. Sears Holdings' overall business has been struggling after years of sales declines and it has been closing some unprofitable stores and selling leases in prime locations.
"It's a sign of how desperate the U.S. parent is and how much trouble they're in," said Colin Cieszynski, senior market analyst at CMC Markets.
"Because all the money, all the leases they got out of, the money didn't stay here, it went south to shore up the U.S. business. The U.S. company is the one that's in real trouble and what's left? You're selling off your most valuable asset."
Sears Holdings shares gave up early gains to decline $2.53 or 5.85 per cent to US$40.70 in New York, while Sears Canada shares ran up 54 cents or 3.43 per cent to C$16.30 in Toronto.
Glum earnings news and worries about inflation helped push U.S. indexes lower as the Dow Jones industrials dropped 101.47 points to 16,613.97, the Nasdaq shed 29.54 points to 4,100.63 and the S&P index was off 8.92 points at 1,888.53.
The U.S. Labor Department said that the producer price index rose a seasonally adjusted 0.6 per cent from March to April, after a 0.5 per cent increase from February to March. The gains suggest that inflation is picking up from very low levels and raised concerns about when the Federal Reserve could act to hike short-term rates from near zero.
Meanwhile, Deere is reporting a 9.5 per cent decline in second-quarter net income to US$980.7 million, or $2.65 per share, compared with $1.08 billion, or $2.76 per share, in the same quarter a year ago. Revenue fell 8.9 per cent to US$9.95 billion on lower demand for farming equipment. Deere expects a four per cent drop in equipment revenue for fiscal 2014, the same decrease it's expecting for the current quarter and its shares were down $1.91 to US$91.70.
Elsewhere in Canada, Power Financial Corp. (TSX:PWF) says it its first-quarter profits totalled C$467 million or 66 cents per share, up from $394 million, or 55 cents per share, in the same quarter of 2013. Operating earnings totalled $440 million, or 62 cents per share, compared with $407 million, or 57 cents per share, year over year. Revenues at the financial services conglomerate that includes Great-West Lifeco (TSX:GWO) and IGM Financial (TSX:IGM) were $10.58 billion compared with $8.15 billion a year ago. Power Financial climbed 22 cents to $34.95.
On the commodity markets, the TSX base metals sector rose 0.7 per cent as July copper gained two cents to US$3.16 a pound.
The gold sector rose about one per cent as June bullion rose $11.10 to US$1,305.90 an ounce.
The energy sector edged 0.16 per cent lower as June crude in New York gained 67 cents to US$102.37 a barrel.
Tech stocks led TSX decliners, down 1.7 per cent with BlackBerry (TSX:BB) down 12 cents to C$8.