The TSX opened higher, but soon slid slightly into negative territory as shares in Research In Motion Ltd. came under significant selling pressure and major U.S. indexes slipped further into the red. The losses came despite new data showing a rebound in the U.S. manufacturing sector in December after a mid-year slowdown.
In early trading, the S&P composite index was down nearly 1 point at 12,815 as RIM shares fell about 5 per cent. The dip in RIM stock came amid what appeared to be positive news; the company announced multiple music and video partners on Monday for its BlackBerry 10 storefront, ranging from Walt Disney Co’s Walt Disney Studios and Sony Corp’s Sony Pictures to Vivendi SA’s Universal Music Group and Warner Music Group.
But there also reports that China's Lenovo Group Ltd., which last week was quoted by Bloomberg as saying it might want to buy RIM, is now downplaying those comments. Lenovo said today the comments, from CFO Wong Wai Ming, was only meant to say that the company was open to all acquisition options, rather than specifically targeting the BlackBerry maker.
The S&P 500 index was down 6 points, or 0.40 per cent, at 1,497 - moving further away from Friday's intraday peak of 1,503.26, which marked a five-year high. The Dow Jones industrial average was down 25 points, or 0.2 per cent, at 13,870. The Nasdaq was down 0.09 per cent.
Durable goods orders in December rose 4.6 per cent, the Commerce Department reported, easily beating economists' forecasts for a rise of 2 per cent. But given that the S&P 500 has more than doubled from a 12-year low in 2009, and is only 5 per cent below an all-time high in October 2007, traders are concerned the market may be becoming overbought despite recent positive economic news in the U.S. and abroad. They're also concerned that U.S. budget talks later this year may lead to another stalemate and could ignite another period of panic selling.
Globally, Chinese stocks were the big movers so far today, soaring overnight to seven-month highs while most other Asian and European markets were rather subdued. The 2.4 per cent rally on the Shanghai stock exchange was aided by a relatively positive earnings outlook for firms there.
In North America, gains in corporate profits are also lending support to the latest rally that has brought the S&P 500 to above 1,500 for the first time in five years. Some 76 per cent of the 147 companies that have released results so far in the index have beaten Street profit estimates, while 67 per cent have surpassed sales estimates, according to Bloomberg data. It's the third year of growth for U.S. corporate profits and the beat rate on sales has improved noticeably from the previous quarter.
Traders are awaiting the key U.S. non-farm payrolls report for January this Friday. Another big event this week will be the Federal Reserve's first policy meeting of 2013, which wraps up on Wednesday. No policy changes are expected, but the Fed could provide some clues on how long its open-ended third round of quantitative easing may last as it reveals its latest readings on the economy.
In the meantime, it's continuing to get more expensive for Canadians to load up on U.S. stocks, with the loonie down by about one-third of a cent this morning to right around a penny below parity. The upside: for those who already hold U.S. stocks and aren't hedged to currency fluctuations, their portfolios are getting an extra boost.
Here's a look at some key stocks on the move this morning:
Caterpillar Inc. reported a profit of $1.04 (U.S.) a share, down from $2.32 a share a year earlier. Revenue decreased 6.8 per cent to $16.08-billion. The company's guidance for 2013 was within analysts' expectations. Shares are up 2.5 per cent at the open.
Apple Inc. shares have been trading on both sides of unchanged this morning and are currently up 1 per cent after last week's big tumble.
Brookfield Renewable Energy Partners LP is raising its all-cash offer for Western Wind Energy Corp by 10 cents per share to $2.60 and giving shareholders until Feb. 11 to tender their stock. Western Wind shares are up 6.7 per cent at $2.54.