The Toronto stock market was lower Thursday, pressured by the financial sector as the latest batch of earnings from Canada's big banks disappointed.
The S&P/TSX composite index fell 66.37 points to 13,238.55 with extra selling pressure coming from mining stocks amid falling commodity prices.
The Canadian dollar erased early losses to rise 0.17 of a cent to 93.92 cents US.
Toronto-Dominion Bank (TSX:TD) shares fell $1.55 to $94.20 after it reported a quarterly profit of $1.622 billion, up from $1.597 billion a year ago. On an adjusted basis, TD earned $1.90 per share, up from $1.83 a year ago but nine cents less than analysts had expected.
The bank also raised its dividend by a penny to 86 cents a share and announced a two-for-one stock split.
Most of TD's major units showed increases but net income from wholesale banking fell by 61 per cent to $122 million from a year earlier.
Meanwhile, Royal Bank of Canada (TSX:RY) had $2.119 billion of quarterly net income, up 11 per cent from last year. Adjusted diluted earnings per share was $1.42, four cents higher than analysts had forecast. But its shares fell 74 cents to $68.26 as Barclays analyst John Aiken pointed to both the wealth management and retail banking divisions as performing weaker than he expected.
RBC also announced that president and chief executive Gordon Nixon will retire next summer.
CIBC (TSX:CM) shares slipped eight cents to $89.97 as it reported a profit of $836 million in net income in its latest quarter, down from $852 million a year ago. After adjusting for one-time items, earnings were $2.22 per share, seven cents ahead of estimates and up 8.8 per cent from a year ago.
Analysts pointed out that despite the pressure on the bank stocks Thursday the financial sector was still up almost 20 per cent year to date.
"None of the numbers were bad per se, they just didn't knock the lights out and it's something that people got accustomed to with the Canadian banks," said Sadiq Adatia, chief investment officer of Sun Life Global Investment.
"There's a lot of good things going forward, it's just that at some point in time people's expectations get higher than what a company can deliver."
U.S. indexes were lower on concerns about what the Federal Reserve will do with a key stimulus measure grew in the wake of more positive economic data.
The Dow Jones industrials lost 44.02 points to 15,845.75 amid further positive news on the U.S. jobs front a day before the release of the government's employment report. The U.S. Labor Department reported that applications for jobless benefits, which are a proxy for layoffs, dropped 23,000 last week to 296,000.
Other data out Thursday morning showed that U.S. gross domestic product for the third quarter was revised upward to an annualized rate of 3.6 per cent from 2.8 per cent.
The Nasdaq declined 6.41 points to 4,031.59 and the S&P 500 index was down 5.53 points to 1,787.28.
Expectations for job creation in the government employment report moved higher after payroll firm ADP reported Wednesday that the private sector added 215,000 jobs last month. Prior to that report, markets had expected job creation of about 183,000.
But while a stronger report would be welcomed as another sign of an improving economy, it would also raise concerns the Federal Reserve is getting close to cutting back on its US$85 billion of monthly bond purchases, a program that has kept long term rates low and supported a strong stock market rally this year.
On the TSX, the TSX financial sector was down 0.65 per cent.
Scotiabank (TSX:BNS) shares fell 57 cents to $63.13 ahead of its earnings report coming out on Friday.
The gold sector fell 2.15 per cent as December bullion fell $25.20 to US$1,222. Goldcorp (TSX:G) fell 53 cents to $22.40.
Metals were lower as March copper declined two cents to US$3.23 a pound. The base metals sector fell 0.8 per cent and HudBay Minerals gave back 14 cents to $7.70.
The energy sector declined 0.1 per cent while the January crude contract on the New York Mercantile Exchange gained 59 cents to US$97.79 a barrel. Suncor Energy (TSX:SU) gave back 46 cents to $36.65.
In other earnings news, shares in Dollarama Inc. (TSX:DOL) fell $2.07 to $85.02 as it said its third-quarter overall sales increased by 14.2 per cent to $522.9 million while comparable-store sales were up 4.8 per cent. Net income was $61.7 million, up from $51.48 million a year earlier, while diluted earnings per share for the Montreal-based discount retail chain rose to 87 cents per share from 68 cents.