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The close: Dow, TSX dip as earnings season begins

The marquis outside of Scotia Plaza in Toronto shows the closing numbers of the TSX at + 252.19 on Tuesday, July 3, 2012.

matthew sherwood The Globe and Mail

North American stocks fell slightly on Monday, ahead of the start of the U.S. second quarter earnings season.

The Dow Jones industrial average closed at 12,736.29, down 36.18 points or 0.3 per cent – marking its third straight loss.

The broader S&P 500 closed at 1,352.46, down 2.22 points or 0.2 per cent. In Canada, the S&P/TSX composite index closed at 11,634.67, down 25.29 points or 0.2 per cent.

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The declines follow jitters in Europe, where rising bond yields have again signalled growing concerns about rising borrowing costs within countries like Italy and Spain.

The yield on Spain's 10-year government rose above 7.1 per cent earlier in the day, before settling back slightly below 7 per cent, up 11 basis points.

The yield on Italy's 10-year bond rose to 6.1 per cent, up 8 basis points. There are 100 basis points in a percentage point.

European stocks moved lower. Germany's DAX index fell 0.4 per cent and the U.K.'s FTSE 100 fell 0.6 per cent.

In the United States, the Federal Reserve reported that consumer credit expanded at more than an 8 per cent annualized rate in May – a far greater pace than economists had been expecting, and a potentially good sign for consumer spending on big-ticket items.

However, attention among investors might be shifting to the start of the second quarter earnings season.

Expectations are low: Bloomberg News reported that analysts expect earnings for companies within the S&P 500 to fall 1.8 per cent over last year, marking the first earnings contraction since 2009.

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Alcoa Inc. kicked off the start of the season with its results on Monday evening after markets closed.

The aluminum producer reported operating earnings of $61-million (U.S.) or 6 cents a share, after excluding one-time items.

That topped lowered expectations from analysts of 5 cents a share. Alcoa shares rose 0.4 per cent during regular trading hours.

In other moves, Apple Inc. rose 1.3 per cent. A British judge ruled in favour of rival Samsung Electronics Co. Ltd., arguing that the maker of Galaxy tablets did not infringe on the iPad design, in part because they were "not as cool." You can't buy publicity like that.

Thomson Reuters Corp. fell 0.1 per cent after it offered to buy electronic foreign exchange platform FX Alliance Inc. for $625-million.

Bombardier Inc. fell 0.3 per cent, even though it announced a conditional order for 15 of its C Series airplanes, valued at about $1-billion.

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Among commodities, crude oil rose to $85.99 a barrel, up $1.54. Gold rose to $1,589.10 an ounce, up $10.20.

Yet, Canadian commodity producers were generally weak, with Suncor Energy Inc. down 0.7 per cent and Barrick Gold Corp. down 0.5 per cent.

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About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More

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