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At midday: Caution prevails on soft retail sales

Traders work on the floor of the New York Stock Exchange, September 13, 2013


North American markets were mostly higher Friday, as key U.S. retail sales figures came in slightly softer than expected and attention continued to focus on next week's important U.S. Federal Reserve meeting.

The S&P/TSX composite index climbed 28.04 points to 12,729.09. The Canadian dollar was down 0.14 of a cent to 96.81 cents (U.S.).

Americans bought more cars, furniture and electronics in August, but held back on most other retail purchases. The U.S. Commerce Department says spending at retail businesses rose 0.2 per cent last month, the smallest gain in four months.

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Analysts had been expecting a gain of 0.4 per cent in August but revised figures issued Friday showed July spending was stronger than first estimated. The department's revised estimate for July is 0.4 per cent, up from 0.2 per cent "It came out pretty much in the wash. A tad to the negative side but not by very much," said Bob Gorman, a chief portfolio strategist at TD Waterhouse. "I would say the figures were marginally softer than anticipated but only marginally."

Gorman said the figures likely aren't strong enough to change the Fed's mind about starting to reduce its stimulus at the end of its two-day policy meeting next Wednesday.

The Fed has been buying $85-billion in bonds every month in an attempt to keep a lid on borrowing rates and boost lending. Currently, most analysts expect the central bank to begin "tapering" its stimulus by $10-billion.

Trading is expected to be light Friday as Wall Street heads into the weekend and the Jewish holiday of Yom Kippur starts at sundown.

The Dow Jones industrials jumped 52.76 points to 15,353.40, the Nasdaq was down 5.53 points to 3,710.44 and the S&P 500 was ahead 2.29 points to 1,685.71.

Meanwhile, higher energy costs pushed U.S. wholesale prices up 0.3 per cent last month. Prices rose a modest 1.4 per cent over the past year, the lowest one-year gain since April.

It was also reported that U.S. businesses restocked their shelves and warehouses in July at the fastest pace since January as their sales rose, a hopeful sign for economic growth. The Commerce Department says business stockpiles increased 0.4 per cent in July from June, after ticking up just 0.1 per cent the previous month.

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In more economic news, Statistics Canada says Canadians boosted their borrowing in the second quarter. The agency says the ratio of household credit market debt to disposable income hit a new high of 163.4 per cent in the second quarter, compared with 162.1 per cent in the first three months of 2013.

On the other hand, Statistics Canada said, rising home prices pushed up household net worth during the second quarter.

Internationally, Gorman said the price of gold will likely continue to fall if tensions surrounding Syria decline because investors will have more confidence in equities. People tend to buy more gold in times of crisis as a safe haven.

Earlier this week, the Assad government agreed to hand over Syria's chemical weapons to Russia to avoid a U.S. military strike. Top U.S. and Russian diplomats are holding talks in Geneva to discuss the specifics.

The Toronto Stock Exchange was mostly mixed in early trading, as the gold sector registered the highest gains at 0.73 per cent. The advance came as gold prices continued to fall after closing at its lowest level in a month on Thursday. December bullion dropped $14 to $1,316.60 an ounce.

Meanwhile, the October crude contract dipped 85 cents to $107.75 a barrel, while December copper fell a penny to $3.20 a pound.

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Overnight, both the European and Asian markets were lower following a report in Japan's Nikkei newspaper saying that Larry Summers will be named to head the Federal Reserve after the central bank meets next week. Summers is believed to have a less favourable view of the aggressive bond-buying program that has flooded markets with cash.

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