In a Tuesday, July 10, 2012, file photo, traders work at the start of early trading at the New York stock Exchange. U.S. stocks slid for a sixth day Thursday, July 12, 2012, as concern spread that weaker global economic growth and the European debt crisis will hurt U.S. corporate earnings.Bebeto Matthews/The Associated Press
Stocks posted modest gains in Toronto on Tuesday, buoyed by rising gold prices, while shares rose strongly in the U.S., where the Dow Jones industrial average flirted with the 14,000 mark and closed at its best level in more than five years.
Traders for the most part ignored disappointing U.S. consumer confidence readings and piled into U.S. stocks ahead of Wednesday's policy meeting of the Federal Reserve Board in Washington.
The U.S. central bank isn't expected to announce any changes in its monetary stance following the meeting, but investors will be parsing the Fed's afternoon statement for any clues on its view regarding current economic conditions and when it might start raising interest rates from their current levels near zero.
The TSX composite index rose 15 points to 12,831, led by material stocks, as the price of gold bullion rose $8.60 U.S. to $1,663 a troy ounce. Toronto stocks weren't able to gain any traction from a surge in oil prices caused by political unrest in Egypt, Algeria and Syria. Oil gained $1.00 a barrel to $97.44 in late session U.S. trading. The TSX energy sector lost nearly 0.2 per cent.
The Dow Jones industrial average gained 73 points to 13,955 - its best level since October 2007 - while the S&P 500 rose 7.7 points to 1,508. The Nasdaq was little changed.
The U.S. Conference Board's index of consumer confidence slumped to a 14-month low of 58.6 in January from 66.7, a drop attributed to the recent increases in payroll taxes as part of the U.S. fiscal cliff negotiations.
The slump in confidence suggests lower growth in the first quarter, but analysts cautioned that the downbeat mood will likely be temporary. "Looking forward, confidence and consumer spending should improve as the year goes on," predicted Amna Asaf, economist at Capital Economics, in a note to clients.
In other economic news, the Case-Shiller housing price index for November increased by a seasonally adjusted 0.63 per cent from a month earlier, suggesting the U.S. residential market continues to be on the mend.
In Toronto, Zenn Motor Co. nearly doubled to $1.26, up 94 per cent, after trading as high as $1.67. The company reported positive preliminary results from testing of its electric storage technology.
Canaccord Financial closed off 5.6 per cent after a downgrade of the brokerage firm by an analyst at the Bank of Nova Scotia.
Research in Motion continued to lose ground, dropping another 3.4 per cent, ahead of the company's release of its new Blackberry 10 smart phone on Wednesday. Many traders are taking profits on the high flying Canadian technology company, which traded for as low as $6.10 in September and has been one of the best performing Canadian stocks over the past four months.
Canadian Pacific Railway soared 3.1 per cent to $116.22. The company reported that fourth-quarter profits rose 15 per cent, offering investors hope that the underperforming railway continues to turn around.
The gold sector led advancers on the TSX, marching upward in step with the higher prices for the precious metal. Among more actively traded issues, Goldcorp rallied 1.7 per cent and Yamana Gold 2.7 per cent.
In the U.S., Ford fell 4.6 per cent over worries the auto maker is selling too many low-margin small cars and not enough high-margin light trucks.
Drug giant Pfizer surged 3.1 per cent following the release of fourth-quarter profit figures that surpassed analyst expectations.