North American markets were headed in different directions Tuesday morning, as Nortel Networks Corp. dragged down Bay Street, while Wall Street cheered strong second-quarter earnings reports and a couple of relatively bullish reports on the economy.

At midday, S&P/TSX composite index was off 69.47 points or 0.84% at 8245.08. The TSX Venture Exchange was down 20.53 points or 1.39% at 1451.86.

The Dow industrial average had advanced 58.48 points of 0.59% to 10020.4, while the Nasdaq struggled to rise from its lows of the year, up 9.85 points or 0.59% at 1848.87. The S&P 500 was up just 2.86 points or 0.26% to 1086.93.

The Canadian dollar was off 0.27 of a cent at US74.83¢.

The TSX took it on the chin right from the opening bell when Nortel CEO Bill Owens said the company is not meeting its cost-cutting and profit margin targets. “It is clear that our business model is not achieving our targeted operating cost [selling, general and administrative expenses and R&D] performance of below 40% of overall revenues and our targeted gross margin per cent of mid 40’s,” Bill Owen, president and CEO, said in a statement. Owen said the company will provide precise figures when it releases preliminary numbers for the first and second quarter in mid-August.

With 20 minutes of the opening, Nortel shares had fallen 11% with more than 6.3 million shares trading hands. By noon, the stock was off 81¢ or 15% to $4.59 on volume of 22.96 million shares — about 20% of the TSX’s total. Nortel’s performance dragged the TSX technology sub-index down by 3.6%.

Elsewhere, the gold sub-index was off 2.5% and financials were down 0.4%. Energy stocks were up, by 0.14%, buoyed by a jump in oil prices, which touched US$42 a barrel. West Texas intermediate closed Monday at US$41.44 a barrel.

In company news, HSBC Bank Canada reported a 22% jump in second quarter earnings: $89 million vs $73 million. Also, Industrial Alliance Insurance and Financial Services Inc. said second quarter profit jumped 15% to $39.9 million.

In the U.S. , stocks were solidly higher Tuesday morning, boosted by a series of positive earnings reports and news that consumer confidence was at a two-year high.

Contributing to early gains were a couple of encouraging economic reports as the Conference Board said consumer confidence surged to a two-year high in July. The Commerce Department said that, although down, U.S. new home sales, came in at a seasonally adjusted rate of 1.33 million – above the 1.27 million expected by economists.

Verizon Communications was the big winner on the Dow after reporting second-quarter earnings of US64¢ a share on revenue of US$17.8 billion, both topping the average analyst estimates.

But another blue chip DuPont missed second-quarter earnings estimates by a penny but revenue topped forecasts and the chemical giant boosted its 2004 earnings outlook to US$2.25 to US$2.35 a share from US$2.10 to US$2.30.

Overseas, prices fell in Tokyo for the fourth straight session – a loss of 402.41 points, or 3.52 per cent, over that period. Tokyo’s Nikkei Stock Average of 225 issues fell 128.01 points, or 1.15 per cent, to 11,031.54 points.

In Hong Kong, the Hang Seng Index fell 18.51 points, or 0.15%, to 12301.32.

London’s FTSE 100 index was up 30.8 points at 4317.8.

Frankfurt’s DAX 30 added 1.6% while the Paris CAC 40 gained 1%.