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TSX, Wall Street markets ahead amid positive U.S. job claims data

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(GlobalPost/GlobalPost)

TORONTO - North American markets were slightly ahead Thursday as the U.S. reported rosier-than-expected unemployment insurance numbers, a sign that the world's largest economy may be continuing with its recovery.

The S

The Canadian dollar was up 0.05 of a cent at 99.72 cents US.

The U.S. Department of Labor said jobless claims dropped by 4,000 last week to a seasonally adjusted 323,000, indicating that there may be more hiring as the number of layoffs return to pre-recession levels. Economists had expected a slight uptick to 358,000.

The department said the four-week average dropped 6,250 to 336,750 — the lowest it's been since November 2007, one month before the recession began.

Despite the positive news, there was initially little reaction on Wall Street.

The Dow Jones industrials gained 29.96 points to 15,135.08 after it closed above 15,000 for the first time earlier this week. The Nasdaq jumped 13.96 points to 3,427.23, while the S

Andrew Pyle, a portfolio manager with Scotia MacLeod in Peterborough, Ont., said it will be difficult for the markets to maintain these current record levels, which may explain some of the small clawbacks.

"One of the problems we have right now is that we have U.S. markets at record highs. A lot of optimism has been pumped into this market," Pyle said.

"Investors are encouraged by the continued onslaught of central bank stimulus, whether it's from the Federal Reserve, the Bank of Japan or the European central bank. It is almost gotten to the point now that investors are moving into the equities market because there is less risk — which is a very dangerous perception to have."

Pyle predicts a major pullback will happen sometime in the summer because current levels are "unsustainable in the short run."

On Thursday, the U.S. also reported that stockpiles held by wholesalers rose 0.4 per cent in March compared with February, when they had fallen 0.3 per cent. Wholesale sales in March dropped 1.6 per cent, the biggest setback since March 2009, when the U.S. was in recession. Sales had risen 1.5 per cent in February.

Inventory rebuilding can be a positive for economic growth because it means stronger production at factories.

The markets have been buoyed in recent days by a number of factors, including signs that the U.S. economic recovery is gaining momentum and that Europe's debt crisis may be easing. But with stock markets headed towards mixed territory, it may be a signal that investors are planning on taking a breather from the record-high levels seen earlier this week.

The Toronto Stock Exchange was mostly mixed by mid-day, with the technology sector being the largest advancer with a 2.2 per cent boost, pushed up by a nearly five per cent shot in share price for smartphone maker BlackBerry amid buzz U.S. business magnate Carl Icahn bought shares. BlackBerry shares were up 68 cents to $15.58.

The real estate sector was the lead decliner, dropping at one per cent as Brookfield Asset Management (TSX:BAM.A) reported that it's profits in its latest quarter declined from $722 million to $697 million, sending its stocks down nearly two per cent to $38.41.

Commodities were retreating from Wednesday's settlement prices when oil, gold and copper all closed at prices not seen in more than a month. It has been a roller-coaster ride recently for commodity prices, which were down earlier in the week.

The June crude contract on the New York Mercantile Exchange declined 33 cents to US$96.29 a barrel. June gold bullion dropped $6.30 to US$1,467.40 an ounce, after have closed up nearly $25 on Wednesday, while July copper was down three cents to US$3.34 a pound.

In corporate news, Canadian Tire Corp. Ltd. (TSX:CTC.A) said it's planning on creating a $3.5-billion real estate investment trust, with an initial public offering later this year. The announcement came as the retailer announced a 2.9 per cent increase in first-quarter earnings amid a 1.7 per cent increase in total revenue to $2.48 billion from $2.44 billion in the same 2012 quarter. Canadian Tire stock was up nearly 13 per cent, or $9.77, to $83.81.

Meanwhile, Bombardier Inc. (TSX:BBD.B) saw a more than six per cent uptick in its shares to $4.50 after it reported a 25 per cent increase in revenue in the first quarter to US$4.3 billion and said its new CSeries airliner remains on schedule. The plane and train builder says net income was down eight cents per share at US$148 million, but up eight cents on an adjusted basis at US$156 million.

Overnight, world markets declined after higher than expected inflation figures were released from China and investors cashed in on some recent gains.

Government figures showed China's consumer price index rose 2.4 per cent in the year to April, up from 2.1 per cent the previous month and ahead of expectations of a more modest advance of 2.2 per cent.

http://www.globalpost.com/dispatch/news/the-canadian-press/130509/north-american-markets-set-flat-opening-following-two-days-r