The bulls and bears are fighting to a standstill Wednesday. At midday the S&P/TSX composite index is unchanged at 7,596.

The only economic data out today was capacity utilization numbers in Canada, which fell as economists expected.

Volume remains huge today, with about 205.2 million shares trading. The selling action is ahead of the buying by a margin of about 11 to eight. Market breadth is quite negative, with losers outnumbering winners about 10 to seven.

Fears about the strength of recovery and corporate profits is sparking selling in sectors that have recently enjoyed runups. Techs have dropped 4.6%, and there are smaller slides in industrials, telecoms, and golds. Against this, there is strength in real estate, energy and financials.

Nortel is leading the trade once again, dropping more than 6% in heavy trading of 38.9 million shares. Traders are getting nervous about its valuation after recent gains, and an analyst downgraded the stock today saying that fundamentals may not justify the price.

Other recent tech gainers are also being punished, with Telesystem International Wireless leading the way down. It’s off 10%.

There are also heavy slides in Celestica, Zarlink Semi, JDS Uniphase, Research in Motion and Geac Computer. The only one with real news is Geac, which reported that it has obtained a three-year, US$50 million secured revolving term credit facility from Wells Fargo Foothill Inc.

Other notable losers include QLT and Sobeys.

On the upside, there is strength in capital trusts, with heavy trading in TD Capital Trust, RBC Capital Trust and Sun Life Capital Trust.

Otherwise, it’s old economy stocks that are leading the gains. There is strength in Inco, Falconbridge, Norske Skog, Minefinders, PetroKazakhstan, Starpoint Energy, Crescent Energy, Thistle Mining and Corriente Resources. VSM Medtech is up too.

In earnings news, Counsel Corp reported that its second quarter loss improved to about US$2.7 million, compared with a loss of $15.3 million in the first quarter of 2003 and $11.2 million in the second quarter of 2002.

Empire Co. Ltd. reported first quarter net earnings of $42.3 million, up $2.5 million from last year’s $39.8 million.

Reitmans (Canada) Ltd. earned $17.2 million in its second quarter for fiscal 2004.

In New York, stocks have been pulling back all morning on valuation concerns. The Dow Jones industrial average is down about 45 points to 9,462. The Nasdaq is down heavily, dropping 30 points to 1,843, on a similar flight from techs. The S&P 500 is down six ticks to 1,018.

The S&P/TSX Venture index is also five points lower at 1,357. Volume is very strong there too at 46.3 million shares. ECU Silver Mining Inc. is the day’s top trader, down 6% on 3.7 million shares.





Industrial capacity slips in second quarter Stocks expected to open lower

Industries cut back drastically on capacity use between April and June, as the impact of SARS, mad cow and a stronger Canadian dollar took their toll on the economy, Statistics Canada said Wednesday..

The industrial capacity utilization rate fell from 82.5% in the first quarter to 81.2% in the second quarter. This was the lowest level since the fourth quarter of 2001, when the rate reached 80.4%. On the plus side, says analysts, it may spur another rate cut from the Bank of Canada.

In a separate release, StatsCan reported that the New Housing Price Index rose 0.3% in July. On a 12-month basis, this index of contractors’ selling prices advanced 4.7%. This is up from June’s annual increase of 4.5% and reflects a continued strong demand for new housing. Twelve of the 21 Canadian urban communities registered monthly increases. Economists note that the increase in prices has not prevented an increase in building permits or sales.

Neither of these figures is likely to spark equities in Canada and south of the border, Wall Street futures are indicating a weak opening.

Yesterday the profit takers were out in force, draining recent gains. The Toronto index suffered its first decline of the month, losing 39.50 points to 7,596.51.

In New York, the Dow Jones industrial average lost 79.09 points to close at 9,507.20. The Nasdaq composite index declined 15.19 points to 1,873.43 after hitting an 18-month high on Monday. The S&P 500 slid 8.47 to 1,023.17.

Asian markets followed suit. In Tokyo, investors sold high technology and auto stocks, reversing its recent trend of setting continuous 14-month highs. The Nikkei average decline 65.72 points overnight to 10,856.32. Hong Kong’s Hang Seng Index fell for a third straight session. It lost 2.1%.