STOCKS DEFY SIGNS OF ECONOMIC WEAKNESS
TORONTO • The Toronto stock market posted a nearly three-digit advance Monday despite weak commodity prices and disappointing manufacturing reports on both sides of the border.
The S&P/TSX composite index rose 93.84 points to end the day at 13,623.01 after having given back more than 400 points or some three per cent last week.
In New York, markets shook off the weak economic news and continued to bound ahead after racking up their biggest monthly gain in four years in October.
The Dow Jones industrial average rose 165.22 points to close at 17,828.76, while the broader S&P 500 added 24.69 points to 2104.05 and the Nasdaq soared 73.40 points to 5127.15.
The markets were up despite negative news from manufacturers. The RBC Canadian manufacturing purchasing managers’ index for October, a widely watched indicator of the health of the Canadian manufacturing industry, slumped to its worst showing since the survey began in 2010.
Adjusted for seasonal influences, the index posted a 48.0 showing in October, down from 48.6 in September and the third month in a row the index has been below 50.0. Numbers above 50 signify manufacturing growth while numbers below 50 signify contraction.
The outlook wasn’t much brighter in the United States, where the Institute for Supply Management’s monthly survey showed U.S. factory activity in October grew at its slowest pace since May 2013. The ISM index slipped to 50.1 in October, from 50.2 in September, as manufacturers pared stockpiles and cut jobs.
Philip Petursson, managing director for capital markets and strategy at Manulife Asset Management, said the poor showing in manufacturing is concerning as earnings season begins.
“If manufacturing is just barely above the break-even growth line, then the forward outlook is a little bit more muted as far as earnings are concerned,” he said.
Markets were helped by gains in healthcare stocks, with drug giant Pfizer Inc. rising US$1.24 or nearly 3.7 per cent to close at US$35.06 after slumping late last week on news it was in talks to buy competitor Allergan PLC.
Valeant Pharmaceuticals International Inc. gained $9.84 or more than eight per cent to end at $131.88 after short-seller Citron Research backtracked on its promise to release a bombshell report against the embattled Quebec-based drugmaker.
Citron alleged nearly two weeks ago that Valeant set up a network of “phantom pharmacies” to fool auditors — allegations that Valeant chief executive Michael Pearson denied as “completely untrue.” Andrew Left, executive editor with Citron, has said he stands by the allegations in that report, but did not release any further details on Monday as he had promised last week on Twitter.
On commodity markets, light crude oil futures slipped 45 cents to close at US$46.14 a barrel, while natural gas fell 6.5 cents to US$2.256 per million British thermal units and gold lost US$5.70 to US$1,135.80 an ounce.
The loonie fell 0.14 of a U.S. cent to end the day at US76.34 cents.
CANADIAN STOCKS