Stocks lower as economic data disappoints

The former Toronto Stock Exchange home in Toronto, August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim

TORONTO - The Toronto stock market was lower Thursday as a worse than expected reading on the American non-manufacturing sector trumped a slew of strong earnings reports.

The S&P/TSX composite index fell 76.98 points to 12,153.14, with the markets also weighed down by Research In Motion (TSX:RIM) as the BlackBerry maker's stock sold off for a third day, down 60 cents or 4.75 per cent to $12.03.

RIM also lost about five per cent in each of the previous two sessions despite having rolled its new BlackBerry 10 operating system.

The TSX Venture Exchange lost 8.4 points to 1,422.81.

The Canadian dollar was off 0.09 of a cent at 101.28 cents US.

U.S. markets also turned lower after the Institute for Supply Management said its index of non-manufacturing activity dropped to 53.5 last month from 56 in March. Any reading above 50 indicates expansion but the reading was a disappointment to traders who had expected a reading of 55.4.

The ISM’s survey covers all sectors outside of manufacturing, which make up about 90 per cent of the American economy. That includes retail, construction, financial services, health care and hotels.

"So the backdrop is, hey, the U.S. is slowing and when you have the non-manufacturing index (slowing), and that’s 90 per cent of the economy, that’s a worry," said John Stephenson, portfolio manager at First Asset Funds Inc.

The latest ISM data added to uncertainty about the strength of the U.S. economy. Earlier this week, the ISM’s index on the manufacturing sector exceeded expectations.

"You have all of these cross-currents, good corporate earnings as opposed to fairly pessimistic to bleak economic outlooks," Stephenson said.

The Dow Jones industrial index lost 13.09 points to 13,255.48.

The Nasdaq composite index moved 7.58 points lower to 3,052.27 while the S&P 500 index slipped 2.15 points to 1,400.16.

There was good news a day before the release of the U.S. non-farm payrolls report. The U.S. Labour Department announced that jobless insurance claims for last week came in at 365,000, down 27,000 from the previous week.

Economists expect the U.S. economy cranked out about 160,000 jobs in April.

General Motors reported earnings per share of 93 cents excluding one-time items related to the impairment of goodwill primarily in Europe, beating analyst estimates by eight cents a share. Net income fell to US$1 billion, or 60 cents a share, from $3.15 billion, or $1.77 a share, a year ago while revenue was $37.8 billion, up 4.4 per cent from a year ago. GM shares gave up early gains and was down cents at $22.50.

Manulife Financial Corp. (TSX:MFC) had a $1.2-billion profit in the first quarter, a 22 per cent jump from a year ago. It attributed the improvement to a number of special items as well as strong operational performance in Canada and Asia. The profit amounted to 66 cents per share before dilution, up from 54 cents per share or $985 million in the first quarter of 2011 and much higher than the 36 cents a share that analysts expected. Its shares slipped 10 cents to $13.24.

Shares in media giant BCE Inc. (TSX:BCE) gave back 17 cents to $40.13 as the company reported $574 million in profit in the first quarter before adjustments, a 14.1 per cent increase from the same time last year. Adjusted profit was $580 million, or 75 cents per common share, which was three cents a share ahead of analyst estimates.

Pharmacy chain Jean Coutu (TSX:PJC.A) has reported improved results in its fiscal fourth quarter that beat analyst estimates on both profit and revenue. Net earnings were $62 million or 28 cents per share, compared with $46.5 million or 20 cents in the same 2011 period. Revenue was $737.2 million, up from $659.8 million. The average estimate of analysts polled by Thomson Reuters had been for earnings of 24 cents per share on $673 million of revenue and its shares climbed 23 cents to $14.43.

After the markets closed Wednesday, First Quantum Minerals Ltd. (TSX:FM) said it earned US$1.34 billion or $2.82 a share in its latest quarter, boosted by the sale of its assets in the Democratic Republic of Congo. That was up from a profit of $206.7 million, or 48 cents per share a year ago. However, its shares were off three cents to $19.98.

The gold sector was the leading decliner, down about 2.5 per cent as bullion prices lost ground with the June contract in New York down $18.90 to US$1,635.10 an ounce. Barrick Gold Corp. (TSX:ABX) was off 96 cents at C$37.85.

Other commodity prices were soft with the July copper contract slipping five cents to US$3.74 a pound, taking the base metals sector down 0.66 per cent. HudBay Minerals (TSX:HBM) fell 11 cents to C$10.26.

The energy sector was off one per cent as the June crude contract on the New York Mercantile Exchange down $2.23 to US$103 a barrel. Suncor Energy (TSX:SU) gave back 51 cents to C$31.73.

European bourses were in the red as London's FTSE 100 index dipped 0.09 per cent, Frankfurt's DAX declined 0.4 per cent and the Paris CAC 40 shed 0.49 per cent.