By James Langton
(June 2 – 13:00 ET) – If nothing else stock traders know good news when they see it and today they got good news in the form of the U.S. jobs report. The data seems to indicate that the economy is slowing, spurring most economists to call for the U.S. Federal Reserve Board to hold off raising interest rates.
Traders love the news and they are piling back into the market. At midday the TSE 300 is up 161 points to 9713. The volume has returned today too, with 93.7 million shares changing hands this morning. The heavy volume is weighted almost 3:1 in favour of buyers. Advancers are outnumbering decliners 3:2.
While some traders are obviously returning to stocks from the hinterland, today’s moves can also be characterized as a rotation away from old economy stocks and back to the new economy. Industrials are leading the rally, followed by consumer products, utilities and media stocks. Golds are strong too as the metal’s price rebounds. Feeding the rotation into techs are the paper stocks, energy and pipeline plays.
The TSE seems to have its trading systems back in order today, allowing Nortel Networks Corp. to return to its rightful position atop the leader board. Nortel is up 3.5% on volume of 6.2 million shares. Yesterday the TSE only managed to trade 3.8 million shares all day, after an isolated glitch hit Nortel.
Nortel is being joined by huge rallies in JDS Uniphase, Sierra Wireless, 724 Solutions, BCE Emergis, Open Text, Certicom and Wi-Lan. All are making very strong upside moves.
The financials are of course boosted by the prospect of the cessation of rate hikes. TD and CIBC are leading the way with large gains in heavy trading.
Gold is also getting a boost. With the metal up about 2%, stocks such as Kinross and Placer Dome are rallying impressively.
The losers in all this continue to be the old economy stocks. Abitibi is leading the paper plays lower. It is joined by slides in General Motors, Burlington Resources, Berkley Petroleum, Northstar Energy and Canadian Natural Resources.
One of the most intriguing stories out this morning is a BBC report that the government of B.C. is wooing Microsoft Corp. to move its headquarters north to Vancouver in an effort to avoid the long arm of the U.S. Department of Justice. The BBC says the province’s government is dangling goodies, such as a new headquarters at the world’s biggest computer company in an effort to woo it northward.
In the U.S. stocks are behaving much the same as they are in Canada, rallying on the slowdown news. The Dow is up 164 points to 10817, back within spitting distance of 11,000. NASDAQ has gained 200 points to 3783, flirting with a return to 4,000. The S&P 500 is up 28 points to 1477.
The CDNX is enjoying the rally too. It is up 42 points to 3373 on strong volume of 23 million shares. Techs are leading the way there too, up 3.5%. Mines are up slightly, and energy stocks are flat. Hilton Petroleum Ltd is the biggest mover, down 37% to $2.40 on volume of 2.9 million shares.