The Toronto stock market was subdued Monday following last week’s strong advance and ahead of another busy corporate earnings week, with Apple reporting after the close.
The S&P/TSX composite index dipped 3.69 points to 13,395.73.
The Canadian dollar found some buoyancy after dropping about 1.5 cents last week in the wake of the Bank of Canada signalling that interest rate hikes are further off than thought. The currency rose 0.07 of a cent to 95.72 cents US.
U.S. indexes were lower as data showed that U.S. factories barely boosted their output in September, adding to other signs that the economy was slowing even before the government shutdown began on Oct. 1.
The Dow Jones industrials fell 21.81 points to 15,548.47 as the U.S. Federal Reserve announced that manufacturing production rose only 0.1 per cent in September, down from a 0.5 per cent gain in August, which was slightly lower than previously reported.
The Nasdaq shed 2.25 points to 3,941.12 while the S&P 500 index was off 0.7 of a point to 1,759.07.
Before the markets opened Monday, drugmaker Merck & Co. said its third-quarter profit plunged 35 per cent to US$1.12-billion because of competition from generic drugs, lower sales of its top-selling medicine, and restructuring and acquisition charges. Ex-items earnings came in at 92 cents a share, four cents better than expected. However, revenue of $11.03-billion missed expectations of $11.13-billion and its shares fell 90 cents to $45.64.
Apple Computer Inc. is set to release its results after markets close. Analysts surveyed by FactSet forecast Apple to report earnings of US$7.92 a share, down nine per cent from a year ago.
That would mean the third consecutive quarter of falling profit for Apple. The company’s stock has fallen 13 per cent in the last year and was up $2.25 to US$528.21 Monday morning.
In Canada, traders will be taking in earnings from a variety of resource heavyweights this week, including Suncor Energy (TSX:SU), Canadian Oil Sands (TSX:COS), Imperial Oil (TSX:IMO) and First Quantum Resources (TSX:FM).
Last week strong earnings from Canadian National Railways (TSX:CNR), Canadian Pacific (TSX:CP) and miners Goldcorp (TSX:G) and Teck Resources (TSX:TCK.B) helped push the TSX up 1.24 per cent.
October has been positive for the TSX, which is up seven per cent year to date with investors also encouraged by steady economic improvement in China and Europe.
Commodities were mixed and gold stocks led decliners, down 0.6 per cent while December bullion declined 50 cents to US$1,352 an ounce. Goldcorp (TSX:G) faded 28 cents to C$27.70.
December crude was up nine cents to US$97.94 a barrel and the energy sector was down 0.45 per cent. Canadian Natural Resources (TSX:CNQ) declined 37 cents to C$32.95.
The base metals sector also drifted 0.45 per cent lower with December copper unchanged at to US$3.27 a pound. Teck Resources (TSX:TCK.B) gave back 45 cents to C$29.82.
Consumer staples led advancers with grocer Metro (TSX:MRU) ahead 57 cents to $66.37.
Traders also looked to this week’s Federal Reserve policy meeting amid speculation on when the Fed will reduce its key monetary stimulus that has kept long term rates low and supported a rally on many stock markets.
The Fed is currently buying $85-billion of U.S. government bonds and other securities but there are low expectations for the Fed doing anything to taper just yet.
“Because of delayed data, the Fed won’t have enough information to determine whether the economy is strengthening sufficiently to warrant tapering,” said BMO Capital Markets senior economist Sal Guatieri.
“Perhaps more importantly, the data on hand won’t justify a reduction in asset purchases, as cautious businesses have curbed new orders, investment and hiring even before the government partially closed shop.”
In Canada, the major economic report of the week comes down on Thursday. Statistics Canada is expected to report that gross domestic product grew by 0.2 per cent in August.
In other corporate developments, there’s a major deal in the North American fertilizer industry. Minnesota-based Mosaic Co. (NYSE:MOS), which is primarily a potash producer, says it has a definitive agreement to acquire the phosphate business of CF Industries, Inc. (NYSE:CF) for $1.2-billion in cash plus $200-million to fund CF’s asset retirement obligation. Mosaic stock rose 85 cents to US$46.79.
European bourses were negative with London’s FTSE 100 index down 0.05 per cent, Frankfurt’s DAX slipped 0.14 per cent and the Paris CAC 40 fell 0.7 per cent.