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At the open: TSX slides amid sharply lower CIBC earnings

Canadian Imperial Bank of Commerce has added a new name to its equity trading desk.

Fred Lum/The Globe and Mail

The Toronto stock market was lower Thursday amid a poorly received earnings report from CIBC, while data showed the U.S. economy performing worse than expected earlier this year.

The S&P/TSX composite index lost 49.6 points to 14,561.36.

CIBC said that poor results in its Caribbean operations were responsible for net income dropping to $306-million from $862-million a year ago. CIBC's adjusted net income came in at $887-million, or $2.17 per share, beating analysts' expectations of $2.07 per share. CIBC also raised its quarterly dividend by two cents to $1 per common share. However, its shares dropped $1.54 to $97.50.

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The Canadian dollar was up 0.15 of a cent to 92.1 cents (U.S.).

U.S. indexes were positive as the first revision to first-quarter gross domestic product showed that GDP actually shrank at an annualized rate of one per cent during the period, largely because of severe winter weather. That was much higher than the 0.5 per cent drop that economists had expected, but they anticipate the weakness to be short-lived.

BMO Capital Markets senior economist Sal Guatieri said that "more recent data suggest a rebound to 3.8 per cent growth in Q2."

The Dow Jones industrials gained 23.63 points to 16,656.81, the Nasdaq climbed 14.91 points to 4,239.98 and the S&P 500 index rose 4.41 points to 1,914.19.

In other corporate developments, Bank of Nova Scotia is selling more than two-thirds of its interest in CI Financial Inc. in a deal worth at least $2.27-billion, making it one of the largest public offerings in Canada. Scotiabank will sell 72-million common shares of CI at $31.50 per share, reducing its current 37 per cent interest to about 11.4 per cent or 32.6-million shares. CI shares lost 37 cents to $33.27 and Scotiabank added nine cents to $68.91.

Former prime minister Brian Mulroney is expected to be elected as board chairman of telecom and media giant Quebecor Inc. next month. Pierre Karl Peladeau stepped down as chairman in March when he announced plans to enter politics. Mulroney is currently vice-chairman of the board and the move could signal an attempt by Quebecor to put some distance between itself and Peladeau. Quebecor shares slipped six cents to $26.69.

In the U.S., Apple is paying $3-billion (U.S.) for Beats Electronics, a headphone and music streaming specialist. The announcement comes nearly three weeks after deal negotiations were leaked to the media. Beats was founded in 2008 by Dr. Dre, now a hip-hop producer, and Jimmy Iovine, a longtime recording industry executive who is currently chairman of Universal Music Group's Interscope Geffen A&M Records.

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Hillshire Brands has another suitor. Tyson Foods Co. is offering to buy Hillshire for $50 per share. That's $5 per share higher than Pilgrim's Pride offer earlier this week. Hillshire Brands, which makes Ball Park hot dogs and Jimmy Dean sausages, has been trying to buy Birds Eye frozen vegetables maker Pinnacle Foods for $4.23-billion.

Financials led TSX decliners, down 0.7 per cent.

The base metals sector was off 0.22 per cent, while July copper slipped three cents to $3.14 a pound.

The energy sector was also down 0.22 per cent while July crude gained 23 cents to $102.95 a barrel.

The gold sector was up slightly as June bullion lost $5.40 to $1,254.30 an ounce.

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