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At the close: Less than a rally, better than a fizzle

Canadian and U.S. stock markets finished solidly higher Monday, failing to build on the day's early promise yet remaining firmly in positive territory to start a short but busy week.

The S&P/TSX composite index closed up 44.69 points, or 0.4 per cent, at 11,624.02, after having given back most of its early 150-point-plus surge that had been fuelled by higher commodity prices. The Canadian market's key resource sectors retreated from their early strength after key commodities, particularly oil and gold, lost steam and slipped back from their early highs.

In New York, the Dow Jones industrial average closed up 132.79 points, or 1.3 per cent, at 10,450.95, having pulled back somewhat from its peak near 10,500 thanks to bullish news from the U.S. housing sector. The S&P 500 closed up 14.86 points, or 1.4 per cent, at 1,106.24 and the Nasdaq composite finished up 29.97 points, or 1.4 per cent, at 2,176.01.

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The U.S. market got a lift from a strong report on existing-home sales for October, which jumped 10.1 per cent. However, analysts cautioned that the result may have been inflated by a U.S. tax-credit program that prompted many buyers to jump into the market.

Canadian stocks got some support from a bullish retail sales report released before the opening. Retail sales rose 1 per cent in September, well ahead of economists' consensus estimate of 0.6 per cent.

Eight of 10 subindexes on the Toronto Stock Exchange finished higher, led by health care, up 0.9 per cent, and energy, up 0.6 per cent. The materials group, which was an early leader, finished up just 0.1 per cent.

Gold ended the day up $18.50 (U.S.) at $1,165.30 an ounce in New York, after topping $1,174 on U.S.-dollar weakness. Oil, which threatened $80 a barrel early in the session, closed up 79 cents at $77.51.

The Canadian dollar closed up 1.3 cents at 94.68 cents, after the U.S. currency weakened following Federal Reserve Bank of St. Louis President James Bullard's comments that he would favour keeping the Fed's asset-buying program active beyond its current expiration date. The greenback lost 0.7 per cent to the euro.

After the close, technology heavyweight Hewlett-Packard Co. issued slightly better-than-expected earnings, although it did so on lower revenues. The company's stock was down slightly in after-hours trading, suggesting the results won't provide much directoin for stocks Tuesday.

On Tuesday, investors will be watching U.S. economic reports on the revised third-quarter gross domestic product estimates and the Case-Shiller home-price index, both out before the opening bell, as well as the Conference Board's consumer confidence numbers, due out early in the session. On the earnings front, consumer-product giant HJ Heinz Co. is slated to release its numbers before the opening bell.

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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