TSX rises as oil adds to gains; New York retreats amid mixed economic news

TORONTO – The Toronto stock market eked out a small gain on higher oil prices, while Wall Street indexes plunged despite a report of solid growth in U.S. housing construction and an uptick in consumer prices.

The Toronto Stock Exchange’s S&P/TSX composite index gained 23.61 points to 13,917.10 after a strong advance of almost 145 points on Monday.

The loonie eased back 0.04 of a U.S. cent to 77.50 cents US as the June contract for benchmark North American crude oil added 59 cents to US$48.31 a barrel.

In economic news, the U.S. Labor Department reported that consumer prices rose 0.4 per cent in April, the most in more than three years. Overall prices are up 1.1 per cent compared with a year ago.

Among other things, the Federal Reserve has been looking for inflation to trend higher and will weigh the impact of the latest figures at its next meeting in June when it decides whether or not to raise interest rates.

The central bank has long indicated that plans to proceed with caution on any rate hikes due to global economic concerns. Low interest rates have helped fuel strength on equity markets since the so-called Great Recession.

Meanwhile, the latest housing data showed that builders ramped up construction of new homes in April, suggesting the market remains solid despite sluggish economic growth. Housing starts climbed 6.6 per cent to a seasonally adjusted annual rate of 1.17 million units.

“The net result is that there was no real new information that tips the scales in favour of a June interest rate hike,” said Craig Jerusalim, a portfolio manager of Canadian equities at CIBC Asset Management.

“The Fed can likely wait until later in the year could wait later in the year before their next move higher.”

In New York, markets were down sharply with the Dow Jones industrial average falling 180.73 points to 17,529.98 , while the broader S&P 500 lost 19.45 points to 2,047.21 and the Nasdaq stepped back 59.73 points to 4,715.73.

“The easy money in equities has already been made as the good, the bad and the ugly all rallied off of the depressed February lows,” Jerusalim said.

Jerusalim added that he sees the most potential in gold prices, as oil remains volatile in the near-term due to temporary factors like production disruptions in Nigeria and Alberta.

“Liquidity has to flow somewhere and gold is a prime candidate for that,” he said.

June gold rose US$2.70 to US$1,276.90 a troy ounce and July copper was unchanged at US$2.09 a pound. The June contract for natural gas was up a penny at US$2.19 per mmBtu.

— With files from The Associated Press

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