Trader Craig Spector, left, works on the floor of the New York Stock Exchange, Tuesday, May 17.Richard Drew/The Associated Press
Canadian stocks rose for a second day as commodity producers rallied amid increases in the prices for crude oil and gold, while gains in Valeant Pharmaceuticals International Inc. helped boost health-care companies.
The benchmark S&P/TSX Composite Index rose 0.17 per cent, or 23.61 points, to 13,917.1 in Toronto. The gauge now trades at 21.3 times earnings, about 12 per cent higher than the 19.1 times valuation of the S&P 500, data compiled by Bloomberg show.
Valeant Pharmaceuticals International Inc. climbed 7.8 per cent, rising for a third session, while Concordia Healthcare Corp. surged 2.4 per cent to lead health-care shares higher. Andrew Left, the short seller whose report on Valeant triggered the drugmaker's tailspin, said Monday that he's a buyer of the stock now that many funds are exiting.
HudBay Minerals Inc. and Encana Corp. jumped more than 4 per cent as energy and raw-materials producers climbed at least 0.9 per cent. Oil hit a seven-month high in New York on speculation that U.S. crude stockpiles declined last week while supply losses in Canada and Nigeria whittled away the global excess.
The two industries account for about 32 per cent of the broader benchmark by market capitalization and have led gains this year with advances of at least 14 per cent. That's helped the S&P/TSX post one of the best performances this year, behind only New Zealand out of 24 developed markets.
Penn West Petroleum Ltd. surged 14.6 per cent to lead all gainers in the S&P/TSX. In an earnings release Monday, the oil and natural gas producer said it exceeded production estimates in the first quarter, and reaffirmed its yearly forecast. Further, Dundee analyst Brian Kristjansen said the company potentially selling its Dodsland Viking assets may yield an excess of $400-million for the company.
Wall Street sold off on Tuesday as investors boosted their bets on the Federal Reserve raising rates later this year, while Home Depot dragged on indexes following its quarterly report.
The Dow Jones industrial average fell 182.1 points, or 1.03 per cent, to 17,528.61, the S&P 500 lost 19.55 points, or 0.95 per cent, to 2,047.11 and the Nasdaq Composite dropped 59.73 points, or 1.25 per cent, to 4,715.73.
U.S. consumer prices recorded their biggest increase in more than three years in April as gasoline and rents rose. The data pointed to a steady inflation build-up that could give the Federal Reserve ammunition to raise interest rates later this year.
Two Fed policymakers on Tuesday said the central bank could still raise interest rates two or three times this year.
Traders now see the probability of a rate hike after the Fed's November meeting at 55 percent, up from roughly 42 percent on Monday, according to the CME FedWatch tool.
"This morning the economic news was generally favorable suggesting that ... the U.S. economy has improved to levels warranting something other that crisis-level rates," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
The major U.S. stock market indexes slid back after rallying sharply on Monday.
The S&P 500 is little changed in 2016. While the benchmark index has risen about 13 per cent since February lows, the rally fizzled out in the last few weeks amid mixed corporate earnings and economic data.
"We seem completely unable to break out of the ranges this year," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, NJ. "For every step forward in the market like yesterday, it just seems like it's met with a step back on a day like today."
West Texas Intermediate futures climbed 1.2 per cent. U.S. crude inventories probably fell by 3.5 million barrels, according to a Bloomberg survey before government data Wednesday. It would be the first consecutive weekly decrease since September. Wildfires in Canada came to within a kilometer of an Enbridge Inc. oil-sands terminal as warm weather and wind spread the flames.
"The thrust in the oil market is that the supply glut is starting to be eradicated," said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Conn. "Falling production and rising demand are expected to wipe out the excess supply that sent us to 12-year lows."
Oil prices have advanced more than 80 per cent from a 12-year low earlier this year on signs the global glut will ease as U.S. production declines. The market has moved into an output deficit earlier than expected following supply disruptions in Nigeria and an increase in demand, according to Goldman Sachs Group Inc.
WTI for June delivery increased 59 cents to settle at $48.31 a barrel on the New York Mercantile Exchange. It was the highest close since Oct. 9. Prices are up 30 per cent this year.
Brent for July settlement rose 31 cents, or 0.6 per cent, to $49.28 a barrel on the London-based ICE Futures Europe exchange. It was the highest close since Nov. 3. The global benchmark oil ended the session at a 29-cent premium to July WTI.
Commodity companies accounted for three of the four biggest gainers on the Standard & Poor's 500 Index. The S&P 500 Oil & Gas Exploration and Production Index was up 1.5 percent at 2:46 p.m.
U.S. crude stockpiles still remain near the highest level in more than eight decades. Gasoline supplies and stockpiles of distillate fuel probably declined by 1 million barrels each last week, according to the Bloomberg survey before Wednesday's report.
Gasoline futures for June delivery rose 1.7 percent to $1.6341 a gallon, the highest settlement since Aug. 31. June diesel climbed 1.9 percent to $1.4674, the highest close since Nov. 10.
The Alberta fires have reduced output by about 1.2 million barrels a day, according to new estimates from the Conference Board of Canada. The research group says 14 days of production cuts represent an economic hit of about $985-million to the provincial economy.
"The longer these outages last, the quicker the pace of rebalancing," said Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London. "Persistent crude stock draws will begin by the end of the second quarter."
With files from Reuters