Stock markets revive despite dismal U.S. jobs report

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This article was published 07/11/2008 (5929 days ago), so information in it may no longer be current.

TORONTO — North American markets shook off disappointing U.S. employment figures and further weakness in the auto industry as traders scooped up low-priced stocks and pushed the market higher in afternoon trading.

Toronto’s S&P/TSX composite index rose 39.1 points to 9,594.51 as key sectors moved ahead.

The TSX mining index headed the advance by climbing 3.6 per cent as Sherritt International Corp. (TSX:S) increased 17 cents to $3.35.

The Canadian dollar was at 84.32 cents US, up 0.4 of a cent after losing almost three cents during the previous two days.

In Canada, the jobless rate rose one-tenth of a percentage point to 6.2 per cent for October, as the economy beat expectations by adding 9,500 jobs.

But Statistics Canada said the increase came with the addition of 40,000 public-sector administrative workers, mostly for the federal election. Meanwhile, private-sector employers cut 20,000 positions.

In the United States, job numbers were more dismaying. The Labour Department said American employers cut 240,000 jobs in October, hurtling the unemployment rate to a 14-year high of 6.5 per cent. The report also said 284,000 jobs were lost in September — many more than the 159,000 originally reported.

However, buyers returned to Wall Street markets after two dismal days. The Dow Jones industrial average climbed 198.96 points to 8,895. The Nasdaq composite index rose 33.94 to 1,643 while the S&P 500 moved up 19.26 to 924.

Bad news piled up from the auto industry, with General Motors Corp. reporting a US$2.5 billion loss in the third quarter, or $4.45 a share.

Ford Motor Co. reported a third-quarter net loss of US$129 million as it burned through $7.7 billion in cash. Ford also said it is cutting 10 per cent of its North American salaried workforce.

German automaker Daimler AG said its global sales in October slid 18 per cent from a year earlier.

Although the day’s news was worse than expected, investors were drawn by prices beaten down the past two sessions.

"We’re coming off of a very oversold market that had already braced itself for bad news out of Detroit and certainly bad economic data in terms of the labour report," said Peter Cardillo, chief market economist at Avalon Partners.

On the TSX, gold stocks were leading the gains up 3.7 per cent. The December bullion contract ended ahead $2 to US$734.20 an ounce — ending the week up 2.2 per cent.

The energy sector rose 0.4 per cent as oil prices pulled up after a two-day plunge. The near-month light sweet crude contract was higher by 34 cents at US$61.11 a barrel on the New York Mercantile Exchange.

In earnings, the tightening economy wore into results at several Canadian companies.

Air Canada (TSX:AC.A) shares lost 12 per cent — or 62 cents to $4.74 — after it posted a net loss of $132 million in the third quarter as the airline’s fuel bill soared 49 per cent to $1.1 billion.

Tim Hortons Inc. (TSX:THI) shares were up 68 cents to $30.08 after a 16.9 per cent rise in third-quarter profit to $78.8 million as revenue sweetened 3.8 per cent to $509 million. The company plans to close some of its restaurants in southern New England due to weak sales.

Quebecor Inc. (TSX:QBR.B) reported third-quarter earnings of $45.6 million, up from a year-ago loss of $35.2 million, with the improvement driven by the media and telecommunications group’s Videotron cable subsidiary, against "disappointing results in publishing and at Sun Media." Its shares slid $1.64 to $19.01.

Telus Corp. (TSX:T) reported a 30 per cent decline in third-quarter net income to $285.1 million, while revenue grew six per cent to $2.45 billion. Its shares were down $1.30 to $39.49.

Dundee Precious Metals Inc. (TSX:DPM) stock tumbled 20 per cent, or 48 cents to $1.97, after the firm said it struck an underwriting deal to raise up to C$70 million for financing development of its gold-copper mine in Bulgaria.

Potash Corporation of Saskatchewan Inc. (TSX:POT) has reached agreements with United Steelworkers locals representing a total of about 500 unionized employees at three of its potash operations. Shares inched 92 cents higher to $95.10.

The Canadian Press