Trader Robert Arciero, left, and David Williams on the floor of the New York Stock Exchange Nov. 13.Richard Drew/The Associated Press
Canadian stocks fluctuated Friday, finishing down to cap the week with an eighth consecutive day of losses. It is the longest losing streak since June 2002
The Standard & Poor's/TSX Composite Index swung between gains and losses as advances in energy producers and health-care companies helped briefly erase an earlier drop amid a worsening outlook for global growth from Asia to Europe and the United States.
The Index slipped 0.4 per cent overall, after earlier erasing a 0.7-per-cent drop in the opening hour of trading. Natural resource producers have slumped almost 5 per cent over the eight days as the Bloomberg Commodity Index tracking prices from copper to crude fell to a 1999 low.
Canadian equities have been among the worst-performing in the world this year, led by declines in natural-resource and health-care stocks, as the country's stock market has been hampered by a slump in oil prices, slowing overseas growth and the prospect of an interest-rate hike from the Federal Reserve.
"The market is looking for a stamp of approval," said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto. His firm manages about $5-billion. "Earnings have been mediocre. These very weak numbers make things more difficult for the Fed."
The S&P/TSX fell 51.76 points to 13,075.42 in Toronto. The benchmark equity gauge has lost 10 per cent this year, trailing only Singapore and Greece among developed markets.
Euro-area gross domestic product rose 0.3 per cent in the third quarter, short of the median 0.4 per cent analysts' estimate in a Bloomberg survey. Meanwhile U.S. retail sales increased less than forecast in October as consumers pocketed money saved from cheaper gas. The data come after figures earlier in the week indicated imports in China, one of the world's largest consumers of natural resources, had retreated on slowing demand from heavy industries.
Energy producers rebounded from a six-week low, reversing earlier declines, led by gains from Encana Corp. to Paramount Resources Ltd. of at least 4.1 per cent. Drugmaker Concordia Healthcare Corp. jumped 16.1 per cent after reporting third-quarter earnings and revenue ahead of estimates.
Toronto-Dominion Bank, Bank of Montreal and Royal Bank of Canada slipped more than 1.2 per cent to weigh on financial companies in the S&P/TSX. The group suffered its steepest weekly decline in almost three months.
Of the more than 200 companies in the S&P/TSX to report in the current period, about 60 per cent missed revenue estimates, according to data compiled by Bloomberg.
Valeant Pharmaceuticals International Inc. added 2.4 per cent, rebounding from a two-year low. Valeant, briefly the largest stock in Canada by market capitalization this year, has lost 71 per cent from an Aug. 5 high amid pressure over how it prices its drugs. The drugmaker said in a conference call Tuesday that the decision to cut ties with pharmacy Philidor Rx Services would meaningfully affect its dermatology business.
U.S. stocks declined, capping their first weekly drop since September, after weaker-than-expected retail sales data added to concern that growth remains uneven as policy makers consider raising interest rates as soon as next month.
Retailers and apparel companies led the drop after Nordstrom Inc.'s results missed analysts' estimates, sending its shares down 15 per cent. Cisco Systems Inc. slumped 5.8 per cent, dragging technology companies lower after its outlook disappointed. Energy shares declined as oil fell to its lowest in more than two months.
The Standard & Poor's 500 Index retreated 1.1 per cent to 2,023.23 in New York, with the gauge posting its worst week since August as it closed at a three-week low. The Dow Jones industrial average fell 202.03 points, or 1.16 per cent, to 17,246.04, while the Nasdaq Composite dropped 77.20 points, or 1.54 percent, to 4,927.88.
"The takeaway from today's retail data is more concern about the pace and magnitude of any Fed rate hike cycle on a still uneven growth experience in the economy," said Eric Wiegand, senior portfolio manager at the Private Client Reserve of US Bank in New York. "There was continued strength in the labour market, which is giving the Fed confidence to raise. But there's softness with data beyond that and without oil moving meaningfully higher suggests we won't see commodity price pressures."
As investors evaluate the strength of the world's largest economy, data today showed sales at retailers rose less than forecast last month as consumers pocketed the money saved after fueling up their cars. A separate report showed wholesale prices unexpectedly declined in October for a second month. Meanwhile, consumer sentiment climbed to a four-month high in a preliminary November reading as Americans took heart in lower interest rates and store discounts.
The S&P 500 has advanced just once in the eight sessions since Federal Reserve Chair Janet Yellen reminded investors that December's policy meeting could bring the first rate increase since 2006. The U.S. equity benchmark has declined 4.1 per cent since rallying to within 1 per cent of a record on Nov. 3. Energy, technology and consumer discretionary shares have each dropped at least 4 per cent this week, the most since August.
Federal Reserve Bank of Cleveland President Loretta Mester said Friday a strengthening U.S. economy is ready for higher interest rates as she predicted growth of 2.5 per cent to 2.75 per cent through the rest of this year and next year. Fed officials yesterday stressed that monetary policy should be tightened only gradually after rates are increased.
Traders are currently pricing in a 66-per-cent chance of a Fed rate increase in December, up from as low as 27 per cent last month. Odds increased sharply after last Friday's stronger-than- expected October jobs report.
Economic data will have centre stage as the majority of companies in the S&P 500 have now reported earnings results. About 73 per cent beat profit estimates while just 44 per cent surpassed sales expectations. Analysts are now predicting a 3.7-per-cent fall in earnings in the third quarter, an improvement on estimates for a 7.2-per-cent drop at the start of the season.
Oil dropped to the lowest in more than two months as stockpiles in developed nations have reached record levels and U.S. crude supplies keep rising.
West Texas Intermediate futures fell 2.4 per cent. Oil inventories have expanded to a record of almost 3 billion barrels because of strong output from OPEC and elsewhere, the International Energy Agency said in a report on Friday. U.S. supplies climbed to 487 million last week, the most for this time of year in more than 80 years, according to U.S. government data.
"The market is being overwhelmed by rising supply," said Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital LLC in Miami. "We could test the six-year lows reached in August at any moment. We will either break through or put in a bottom."
Crude has dropped 45 per cent in the past year as the Organization of Petroleum Exporting Countries pumped above its collective quota and Russian output rose to a post-Soviet high, swelling global stockpiles. Iran is pushing to regain oil sales lost to sanctions after agreeing in July to accept limits on its nuclear projects in return for market access. Oil price competition in Europe is set to intensify when Iranian crude returns, the IEA said.
WTI for December delivery dropped $1.01 to $40.74 (U.S.) a barrel on the New York Mercantile Exchange. It was the lowest close since Aug. 26. Futures fell 8 per cent this week, the biggest decline since March. The volume of all futures traded was 46 percent above the 100-day average at 2:50 p.m.
Brent for December settlement, which expired Friday, slipped 45 cents to to $43.61 a barrel on the London-based ICE Futures Europe exchange. It's the lowest close since Aug. 26. The more-active January contract declined 72 cents to $44.47. The European benchmark crude closed at a $2.87 premium to WTI.