Major U.S. stock indexes edged gently into positive territory at the open, but soon succumbed to selling pressure ignited by a couple of disappointing economic reports. The TSX opened in the red, and has stayed there, amid more weakness in commodity prices this morning - as well as a nearly 2 per cent drop in shares in Research In Motion Ltd.
Just past 10 a.m. (ET), the resource-heavy S&P/TSX composite index was down 73 points, or 0.5 per cent, at 12,608. New York gold futures were down about $5 at $1,571 (U.S.) an ounce and crude oil was down 35 cents at $96.84 per barrel.
The S&P 500 index was down 7 points, or 0.4 per cent, at 1,563. The Dow Jones industrial average was down 43 points, or 0.2 per cent, at 14,623.
U.S. stock futures earlier this morning were pointing to a somewhat more promising start, but sentiment turned more cautious after a reading on U.S. private sector job growth came in below expectations. The ADP report for March showed 158,000 new jobs, declining from 198,000 last month and missing analysts' expectations for 205,000 new jobs. It suggested Friday's more influential nonfarm payrolls report could surprise to the downside.
Meanwhile, the U.S. ISM March non-manufacturing index came in at 54.4, a weaker reading than the 56 reported for February, which was also what economists had expected for this month.
The S&P 500 closed at its highest level ever on Tuesday - while also hitting a record intraday high - as the firming U.S. economy, and the belief that stock market valuations are still reasonable, kept investors fairly confident that the rally can continue.
Even with a more than 10 per cent gain in the S&P 500 this year, many strategists aren't overly concerned. Famed investor Jim O'Shaughnessy, for instance, told Inside the Market Tuesday in a live discussion that from a very long haul perspective, history suggests the stock rally is still in its young days.
When looking at history's 50 worst 10-year periods, they are never followed by negative returns in the three, five or 10 years that follow them, he pointed out. February of 2009 was the second-worst 10-year return for stocks since 1871, and as we are now only in the fourth year of a 10-year period following that big downturn, he believes there's a good bull case right now.
Still, others looking beneath the surface of Tuesday's record highs found things to worry about. They note that the Dow Jones Transportation Average actually fell 1.2 per cent, its second straight day of losses. Similarly, small-cap stocks struggled on Tuesday. Both these sectors can be leading indicators for the broader market.
In early trading today, however, the Dow Jones Transportation Average was up a modest 0.3 per cent and the S&P 600 small cap index was up a very marginal 0.02 per cent.
The bull run may also face another challenge in coming days as the U.S. corporate earnings season gets underway, starting with Alcoa Inc.'s first quarter numbers next week. According to analyst estimates compiled by Bloomberg, profits at S&P 500 companies are forecast to drop 1.9 per cent for the period - their first retreat since 2009 and marking quite a reversal from the 8 per cent rise in profits seen in the fourth quarter.
Given that strong earnings growth has been one of the drivers of the bull run, it could act as a trigger for a pullback should the forecasts pan out.
Here's a look at some stocks moving on news this morning:
Toronto-Dominion Bank shares opened up 0.04 per cent after Ed Clark announced he is stepping down after 12 years as CEO. He will be replaced by Bharat Masrani, who runs the bank's personal and commercial banking operations.
Zynga Inc. shares were up 10 per cent after the company said it plans to introduce real-money online gambling in the U.K.
Global Payments Inc. shares were down 6 per cent after it reported lower-than-expected revenues.
Apple shares are up 0.9 cent after the Wall Street Journal reported late Tuesday that the company will begin production of a new iPhone in the current quarter.
Vodafone Group PLC ADS units are down 2 per cent after Verizon Communications Inc. late Tuesday said it had no plans to make an offer for the U.K. telecom firm, although it could buy Vodafone's 45 per cent interest in Verizon Wireless.
ConAgra Foods reported adjusted earnings per share of 55 cents, just shy of the average analyst estimate of 56 cents. Shares opened down 1.4 per cent.
Monsanto Co. raised its full-year profit forecast on Wednesday after reporting a better-than-expected second quarter driven by strength in its global corn business. Shares opened up 0.3 per cent.