North American stocks shook off their Monday morning blahs to stage a comeback in afternoon trading, finishing modestly higher despite lingering nerves over the civil charges laid against Goldman Sachs late last week.
The S&P/TSX composite index closed up 32.31 points, or 0.3 per cent, at 12,102.97, after being down nearly 100 points early in the day. The Dow Jones industrial average closed up 73.39 points or 0.7 per cent at 11,095.30, also a reversal of better than 100 points from its lows. The S&P 500 rose 5.39 or 0.5 per cent to 1,197.52, but the Nasdaq composite index dipped 1.15 points or 0.1 per cent to 2,480.11.
Many financial markets got off to a shaky start on continued concerns over the implications of the Securities and Exchange Commission's fraud charges against Goldman Sachs. But as the day wore on, stocks, commodities and currencies all found buyers attracted by the Goldman-fuelled lows, and all staged modest recoveries.
Banks in particular bounced back, after news hit the market that the SEC leadership was split on the decision to pursue a case against Goldman. The suggestion was that given the dissent within the SEC on the Goldman move, the regulator might not be inclined to expand its legal battles to many other Wall Street names.
In Toronto, six of 10 industry sub-groups closed higher, led by financials, up 0.8 per cent. Materials and energy stocks finished flat, recovering from early weakness thanks to a turnaround in key commodity prices, which narrowed their declines in afternoon trading.
Oil closed down $1.46 (U.S.) at $81.78 a barrel in New York. Gold slipped 80 cents to $1,136.10 an ounce.
The Canadian dollar, which tumbled more than a full cent against its U.S. counterpart Friday as investors fled commodity currencies in favour of the safety of the U.S. dollar, slipped two-tenths of a cent Monday, to 98.54 cents (U.S.), recovering after falling below 98 cents in midday trading.
After the close, U.S. bellwether IBM Corp. released earnings that were a shade better than market expectations. Before the opening bell on Tuesday, two more Dow component stocks - Coca Cola and Johnson & Johnson - are slated to release their results.
Canadian investors will turn their attention to the Bank of Canada, which announces its latest decision on interest rates before the market opens Tuesday. The central bank is highly unlikely to announce a rate increase, but may well drop hints in its announcement about when it will begin raising rates - likely sometime this summer, but potentially sooner.
Meanwhile, U.S. Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Timothy Geithner are both scheduled to testify Tuesday at a Congressional hearing into the failure of Lehman Brothers.