Stocks were clinging to modest gains in midday trading Monday, as bullish U.S. economic news and stronger commodity prices trump the latest black cloud in the financial sector.
Shortly after noon ET, the S[amp]amp;P/TSX composite index was up 16.58 points at 10,927.33. Eight of 10 major sector subindexes were up, led by materials, up 1.1 per cent on higher commodity prices. Technology stocks led the downside, off 1.7 per cent.
In New York, the Dow Jones industrial average was up 98.17 points at 9,810.90, the S[amp]amp;P 500 was up 9.24 points at 1,054.43 and the Nasdaq composite index was up 13.10 at 2,058.21.
Stocks have forged ahead despite news Sunday that U.S. banker CIT Group had filed for bankruptcy protection. Though the news is sure to rekindle fears about the continued perils in the financial sector - more than a year after the Lehman Brothers failure - much of the negative inpact of the news may have already been priced into stocks on Friday, when rumours surrounding CIT's health contributed to a 250-point slump on the Dow.
Meanwhile, the market's mood was buoyed by a string of positive economic indicators Monday morning. The Institute for Supply Management's closely watched index of manufacturing activity came in at 55.7, above market expectations, marking the third straight month that the indicator showed expansion in the battered factory sector. Construction spending and pending home sales for September also showed surprising strength.
Stock indexes surged on the ISM and other economic news, and have managed to hold on to most of those gains throughout the morning.
Meanwhile, strong commodity prices are giving Canada's resource-heavy index a lift. Gold is up $20 (U.S.) at $1,060.40 an ounce in New York, while crude oil is up $1.28 at $78.28 a barrel, reversing some of Friday's losses. Analysts pointed to selling in the U.S. dollar as a key factor in the commodity gains.
The Canadian dollar is up 0.8 of a cent at 93.02 cents (U.S.).
Meanwhile, markets got some bullish corporate news from a source that hasn't been big on that kind of thing in recent months - Ford Motor Co. The car maker reported an unexpected profit of nearly $1-billion, sending Ford's stock up more than 9 per cent. However, the results were juiced big-time by the U.S. cash-for-clunkers rebate program, and may prove hard to sustain.
© The Globe and Mail
