Source: The Canadian Press

The Toronto stock market closed sharply higher Wednesday as a string of strong U.S. earnings reports and economic data persuaded investors that the American economy continues to improve.

The S&P/TSX composite index rose 102.89 points to 12,204.41 while the TSX Venture Exchange added 9.93 points to 1,674.88.

The Canadian dollar closed above parity with the American greenback for the first time since May 30, 2008, up 0.27 of a cent at 100.08 cents US.

Investors were particularly pleased with an earnings report from chip giant Intel showing that companies are starting to spend again on technology.

Intel said Tuesday its net income in the first quarter nearly quadrupled over last year to US$2.4 billion or 43 cents a share. That was much better than the 38 cents a share that had been expected. Intel also beat revenue expectations and its stock was up 75 cents at US$23.52.

The TSX tech sector moved up 0.92% in the wake of the Intel report.

Research In Motion Ltd. (TSX:RIM) shares ran ahead $1.26 to $73.80 after the BlackBerry maker announced it was purchasing for cancellation two million common shares.

The financial sector was the leading component, up 2% after American banking giant JPMorgan Chase & Co. said its quarterly profit rose 57% to US$3.3 billion or 74 cents a share, easily topping analyst expectations of 64 cents. Its shares advanced $1.86 to US$47.73.

In Toronto, CIBC (TSX:CM) climbed $1.74 to $74.74 while Royal Bank (TSX:RY) rose $1.78 to $61.31.

Elsewhere in the sector, Standard & Poor’s cut its ratings on Sun Life Financial Inc.’s (TSX:SLF) key North American insurance units by a notch, to AA minus from AA. The ratings agency said it expects 2010 operating earnings to fall short of its expectations. Sun Life shares were up 19 cents at $32.19.

Michael Binger, portfolio manager at Thrivent Investment Management in Minneapolis, said the strong results from leaders of the American banking and technology industries were signs that the recovery is on track.

“It diminishes the chance that we go back into a double-dip recession,” he said. “It lends credence that the financial industry is recovering and the tech industry is beyond recovering and is doing very well.”

The Toronto market’s energy group rose 0.32% as the May crude contract on the New York Mercantile Exchange rose $1.79 to US$85.84 a barrel after the U.S. Energy Information Administration said crude oil stockpiles decreased by 2.2 million barrels last week. Analysts had expected another rise in inventories.

On the TSX, Canadian Natural Resources (TSX:CNQ) improved $1.05 to C$79.20.

Gold stocks advanced as the June bullion contract on the Nymex climbed $6.20 to US$1,159.60 an ounce. Kinross Gold (TSX:K) was 27 cents higher at C$18.49.

Barrick Gold Corp. (TSX:ABX) shares rose 25 cents to $40.66 after the miner won a limited injunction in a Nevada court that allows for continued operation of its new $500-million mine at Cortez Hills. Native tribes in Nevada have sued Barrick to stop expansion of the mine near a sacred site.

The base metals sector rose 0.86% while May copper was ahead one cent at US$3.61 a pound. HudBay Minerals (TSX:HBM) gained 36 cents to C$13.66 and Labrador Iron Mines Holdings (TSX:LIM) climbed 27 cents to C$7.20.

A major drag on the TSX was Potash Corp. (TSX:POT). Its shares fell $2.69 to $109.61 after Goldman Sachs downgraded the stock from buy to neutral, saying “checks suggest the planned domestic potash price hike is not going through and recent nitrogen and phosphate prices have weakened.”

Corus Entertainment Inc. (TSX:CJR.B) reported that quarterly revenue beat expectations, rising 6% from a year ago to $192.7 million.

But the Toronto-based company’s second-quarter net income missed expectations – falling to $14.6 million, or 18 cents per diluted share – down about 50% from a year earlier. Analysts had expected net income of 32 cents a share. Corus shares shed nine cents to $19.77.

Despite the positive performance from the start of the U.S. earnings season this week, there are analysts who are still cautious.

“We know all the negatives and, in historical perspective, we have gone through hell’s half acre over the last two years, particularly after Lehman Bros. went bust, followed by that six-month period where nothing was working,” said Irwin Michael, president of I. A. Michael Investment Counsel.

“But many of us are still coloured (by the experience), looking over our shoulder, so in consequence good news is still deemed to be skeptical.”