By James Langton
(July 20 – 13:00 ET) – Stocks are rallying after a rather dovish speech from Federal Reserve Board Chairman Alan Greenspan this morning. Greenspan isn’t prepared to call the Fed finished, but he did indicate to Congress that the economy is showing signs of slowing.
That was all traders needed to hear, and they hit the markets buying. At midday, the TSE 300 is up 96 points to 10,729. Volume is average at 65 million shares, more than 2:1 in favour of buyers. Advancers are outrunning decliners almost 5:4.
Tech stocks are leading the way, up 2%. Both hardware and software stocks are strong, joined by wholesalers, broadcasters and engineers. Apart from this rather narrow strength though most of the other groups are off, if slightly, as investors rotate out of everything else into technology. Transports, oil and gas producers, tobacco and financial management firms are weakest.
Nortel Networks is, as usual, powering stocks higher. Up more than 2%, the stock is giving indexes a big boost. Other techs are strong, too, most notably JDS Uniphase, which has gained 14% on news that it is being added to the S&P 500. It has also debuted on Goldman Sachs recommended list. Other names such as Celestica, Exfo Electro, Sierra Wireless, ATI, and Microcell are caught in the updraft.
Westburne Inc. and Western Star Trucking are both up strongly on news that they are being taken over, adding 12% and 16% respectively.
On the downside, recent hot stocks are being hit by selling. Janna Systems is off 4%, QLT is down 3%, Rogers is off more than 3%. CN and Power are both down, too.
In business news Domtar Inc. reports its second-quarter profit nearly doubled too 33¢ a share from 17¢ last year, but it still disappointed analysts. Cara Operations Ltd. saw its profits rise to 9¢ a share from 7¢. Alberta Energy Co. managed profits of 77¢ a share, up from 14¢ last year, joining all the oils in posting monster profit increases. AEC slipped 2.5% on the news, though.
Wi-Lan Inc. has signed a five-year deal. $45 million supply deal with SkyberNet International BV to supply its high speed wireless products. TransCanada PipeLines Ltd. is announcing it has sold a 49% interest in Tuscarora Gas Transmission Company to TC PipeLines, LP for US$28 million in cash.
In the U.S. stocks are rocking with the dovish Greenspan fuelling the rally. The Dow is up 126 points to 10,822. The NASDAQ composite has gained 104 points to 4159. The S&P 500 is up 13 points to 1,495.
JDS Uniphase is soaring on the NASDAQ, too. IBM is supporting the Dow, with strong gains. Lucent Technologies Inc. is falling though after it hinted that the next two quarters will be disappointing. Lucent’s woes are boosting IBM and Nortel.
Financials are also getting a boost by Greenspan’s comments, giving gas to Citigroup Inc., J.P. Morgan & Co., American International Group Inc. and Goldman Sachs Group Inc.
The small caps are in on the rally today, too. The index is up 14 points to 3,369 on strong volume of 18.4 million shares. Mines and oils are down, but techs are overwhelming that weakness. Advanced Sensing is the top trader, up 124% to 56¢ on more than 2 million shares traded.