TSX inches up on U.S. GDP growth, Fed relief, BlackBerry posts huge loss

TORONTO – The Toronto stock market gave up a strong triple-digit runup to close Friday little changed amid data showing the U.S. economy performed much better than expected during the third quarter.

The S&P/TSX composite index came off a 112-point jump to edge up 7.4 points to 13,399.6, while traders took some profits from a positive week.

Traders also focused on BlackBerry (TSX:BB)(Nasdaq:BBRY), which posted a quarterly loss of US$4.4 billion or $8.37 a share, down from a profit of $9 million or two cents a share a year ago.

Poor sales of its new BlackBerry 10 devices sent revenue tumbling 56 per cent from a year ago to US$1.2 billion, which was $400 million lower than expected. Adjusted losses from continuing operations were US$354 million, or 67 cents per share — 23 cents below analyst estimates.

Despite the weak financial report, BlackBerry shares were up sharply, jumping $1.07 or 16.04 per cent to C$7.74 on the TSX and ahead 97 cents or 15.52 per cent to US$7.22 in New York.

The stock rally was likely fuelled by a five-year manufacturing partnership with Foxconn, optimistic comments from new chairman and interim CEO John Chen and short covering, as traders who bet against the stock — or shorted the security — had to buy back the borrowed shares. The stock is still down from a 52-week high in Toronto of $18.49.

The Canadian dollar closed up 0.15 of a cent at 93.91 cents US.

The U.S. Commerce Department said that the economy grew at a solid 4.1 per cent annual rate from July through September, the fastest pace since late 2011 and significantly higher than previously believed. Much of the upward revision came from stronger consumer spending.

The final look at growth in the summer was up from a previous estimate of 3.6 per cent.

“It’s a very substantial revision,” said Bob Gorman, chief portfolio strategist at TD Waterhouse.

“And the key is that economic data is revised constantly but all the data is pointing in the same direction at this stage and… it points to the pickup in economic growth that we felt was coming.”

New York indexes also finished off session highs but also found lift from the Fed announcement Wednesday where it ended months of speculation and announced it will start to end its latest asset-purchase program.

The Dow Jones industrials were up 42.06 points to 16,221.14, the Nasdaq gained 46.61 points to 4,104.74 and the S&P 500 index was ahead 8.72 points to 1,818.32.

Policymakers have decided to cut $10 billion from the Fed’s monthly purchases of U.S. Treasuries and mortgage-backed securities starting in January. It also said it “will likely reduce the pace of asset purchases in further measured steps at future meetings.”

The Fed also emphasized that its main interest rate would remain low until U.S. unemployment falls below 6.5 per cent. It’s now seven per cent.

The base metals segment led advancers, up 1.1 per cent while March copper gained one cent to US$3.31 a pound and the base metals component rose per cent. Teck Resources (TSX:TCK.B) climbed 65 cents to $26.31.

The interest rate sensitive utilities sector, which has lost ground amid rising bond yields, had a positive session, rising 0.6 per cent. Emera (TSX:EMA) was up 83 cents to $30.73.

The energy sector was slightly lower as February crude on the Nymex gained 28 cents to US$99.32 a barrel. Canadian Natural Resources (TSX:CNQ) was up 28 cents to C$35.30.

The TSX gold sector gave up early gains to move down about 0.2 per cent while bullion prices ticked higher after plunging over $40 on Thursday to three-year lows. The February contract on the New York Mercantile Exchange rose $10.10 to US$1,203.70 an ounce. Iamgold (TSX:IMG) lost four cents to C$3.43.

Quantitative easing had supported gold prices because of inflationary fears. But inflation is tame in many countries and data out earlier this week showed the consumer price index rising at an annual rate of only 1.2 per cent, significantly below the Fed’s inflation target of two per cent.

Gold prices are down 29 per cent so far this year while the TSX Global Gold sector has tumbled about 50 per cent.

The Fed move to taper asset purchases and stronger than expected U.S. economic growth in the third quarter left the TSX up 2.1 per cent for the week while the Dow gained 2.95 per cent. The showing left the Toronto market up 7.8 per cent for the year while the Dow has charged ahead 23.8 per cent.