By James Langton
(June 1 – 13:00 ET) – Markets are booming on news that the U.S. economy may be slowing. The National Association of Purchasing Managers index was released at 10:00 ET this morning, indicating a drop in activity. To some traders this is a sign that the economy is slowing and interest rate hikes are finally working. The possible end to rate hikes has traders ebullient.
Stocks are rallying across the board on the news, and the TSE 300 is up 238 points at midday to 9490. Volume remains rather light at 65.9 million shares, although the action is decidedly positive, about 3:1 in favour of buyers. Advancers are outpacing decliners by more than 5:4.
Tech stocks are leading the rally, although perhaps not as much as they might be. The TSE reported a technical trading glitch that forced it to halt market giant Nortel Networks Corp. shortly after 10:00 ET this morning. Nortel is the only stock affected by the as-yet-undiagnosed problem. Prior to the halt Nortel was up more than 5% on 1.3 million shares, but for a change it is not the most heavily traded stock on the TSE.
Nevertheless, industrials are still leading the way, up 4.3%. Also rallying heavily are media stocks, utilities, financials, consumer products, energy stocks and paper plays. Only real estate is down notably.
With Nortel halted Beau Canada Exploration Ltd. is the hottest trade on the TSE, up 2¢ in heavy trading after it announced that it is shelving its plans to sell the company while it deals with the resignation of long-time CEO Tom Bugg.
Also surpassing Nortel is Basis 100, up 26% on 1.8 million shares on the heels of a new issue. BCE is also active to the upside, as are tech stocks Research in Motion and Corel Corp.
In other business news, the Alcan-Algroup deal looks set to grow through thanks to an increased id by Alcan that has pulled big shareholder Martin Ebner onside.
Both Scotia and CIBC have joined the parade of record bank earnings. Scotia reported Q2 earnings per share of 88¢, up from 73¢ last year. CIBC booked an EPS of $1.64 up from 66¢ in the period last year These results combined with the new sanguine view on interest rates is pushing both stocks up.
In New York the story remains much the same. A rally sparked by the NAPM has pushed the Dow up 129 points to 10651. NASDAQ is even stronger, up 147 points to 3548. The S&P 500 has gained 25 points to 1445.
The small caps are enjoying the rally, too. The CDNX has added 49 points today to 3312 on strong volume of almost 20 million shares. Mines and energy stocks are up too, but techs are leading the way with gains of 3.8%. Masuparia Gold Corp is the busiest issue however, down 40% to 29¢ on 2.2 million shares.