North American markets opened with modest losses, as investors grow increasingly concerned that the more than 7 per cent rally in the S&P 500 so far this year has left it vulnerable to a short-term pullback.
Precious metals stocks on the TSX were struggling, as the gold price dropped to six-month lows this morning and spot prices overnight hit the dreaded "death-cross" technical formation, whereby the 50-day moving average falls below the 200-day moving average. The bearish charts for gold could usher in further losses for bullion, already reeling from the shift away from haven investments to more risky securities such as stocks, as well as a lack of inflation in global economies.
The April gold futures contract in New York was down $14.60, or nearly 1 per cent, at $1,589.40 as the North American equity trading day got underway. Barrick Gold Corp. was down 1 per cent and Kinross Gold Corp. was off nearly 3 per cent.
The S&P/TSX composite index was down 26 points, or 0.2 per cent, at 12,783; the S&P 500 was down just over 1 point, or 0.09 per cent, at 1,529; and the Dow Jones industrial was about unchanged.
The S&P 500 hit a fresh five-year high on Tuesday, with recent gains fuelled by strong corporate earnings, the avoidance of the dreaded "fiscal cliff" scenario that paralyzed markets at the end of last year, and decent economic data. Now, investors are left wondering whether it's time to take profits, especially as U.S. spending cuts are set to take hold next month unless averted by the U.S. political parties who are not known for their cooperative manner.
U.S. economic data this morning didn't move markets much, even though the U.S. Commerce Department reported that housing starts in January fell 8.5 per cent to 890,000, below the 922,000 that economists had expected. Building permits rose 1.8 per cent to 925,000, near the consensus forecast. Meanwhile, the U.S. Labour Department said the producer price index for January rose 0.2 per cent, defying economists' forecasts for a drop of 0.3 per cent.
This afternoon, the minutes from the Jan. 29-30 U.S. Fed meeting will be monitored for clues on when U.S. quantitative easing measures may conclude. Minutes from their December meeting revealed members were split between those wanting to halt bond purchases in the middle or at the end of the year.
Here's a look at some key stocks moving on news this morning:
Office Depot Inc. said it will buy rival OfficeMax Inc. in a transaction that will see Office Depot issuing 2.69 shares for each OfficeMax share. But reports have since surfaced that the announcement was made prematurely and that a final deal has not yet been reached. Nonetheless, shares are surging in both stocks at the open; Office Depot is up 9 per cent and OfficeMax is up 6 per cent.
Dell Inc. shares are down 0.1 per cent despite reporting late Tuesday fourth-quarter earnings and revenues that slightly beat analysts' forecasts.
Herbalife Ltd., involved in a heated battle between activist investors Bill Ackman and Carl Icahn, late Tuesday raised its 2013 earnings forecast. Shares are up 1 per cent at the open.
U.S. luxury homebuilder Toll Brothers Inc. reported a 49 per cent jump in new orders in the first quarter and said it would enter the apartment rental business to take advantage of a supply crunch. But shares are down nearly 3 per cent.
- Office Depot Inc$5.88-0.14(-2.33%)
- Herbalife Ltd$57.95-1.78(-2.98%)
- S&P/TSX Composite$13.95K+65.02(+0.47%)
- S&P 500 INDEX$2.07K-10.51(-0.51%)
- Dow Jones Industrials$17.77K-57.12(-0.32%)
- Gold Front Month Futures$1.29K+28.20(+2.23%)
- SPDR Gold Trust$123.65+2.36(+1.95%)
- Toll Brothers Inc$27.30-0.22(-0.80%)
- Updated April 29 4:00 PM -4GMT. Delayed by at least 15 minutes.