TORONTO - The Toronto stock market closed higher Tuesday, supported by the gold and telecom sectors but investors were cautious following a surprise drop in U.S. consumer confidence that called into doubt the strength of a U.S. economic recovery.
The S&P/TSX composite index rose 56.27 points to 11,394.99.
The U.S. Conference Board reported that consumers' confidence in the economy fell in September as worry by Americans over job security offset any enthusiasm about the rally in the stock market.
Its consumer confidence index now stands at 53.1, down from the revised 54.5 reading in August. Economists surveyed by Thomson Reuters had been expecting a reading of 57.
"The American consumer has finally figured out that having no cash, no money, no nothing is a tough place to be in a recession or a time like we've had in the last little while," said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.
The news was better in Canada, where the Conference Board of Canada's index of consumer confidence climbed 2.5 points in September. It noted that its index has risen in each of the past seven months, marking the longest streak of consecutive monthly increases since 2002.
The increase was led by continued improvement on the major purchases question, and a more optimistic outlook on future employment opportunities.
The Canadian dollar gained 0.17 of a cent to 92.12 cents US.
The TSX gold sector was the major advancer, up 2.69 per cent as the December bullion contract on the New York Mercantile Exchange added 30 cents to US$994.40 an ounce. On the TSX, Barrick Gold Corp. (TSX:ABX) gained $1.13 to C$40.67.
The telecom sector was also stronger, up 0.9 per cent with Telus Corp. (TSX:T) ahead 57 cents to $34.69.
The energy sector was flat as the November crude contract on the New York Mercantile Exchange moved down 13 cents to US$66.71 a barrel following the release of the soft consumer sentiment numbers. Oil had advanced 82 cents Monday after crude retreated almost nine per cent last week on demand worries. Canadian Natural Resources (TSX:CNQ) gave back 94 cents to C$72.50.
The TSX Venture Exchange was ahead 2.58 points to 1,272.31.
New York markets turned lower on the consumer data after earlier enjoying a minor advance following a report showing home prices increased from June to July.
The Dow Jones industrial average was 47.16 points lower at 9,742.2.
The Nasdaq composite index lost 6.7 points to 2,124.04 while the S&P 500 dropped 2.37 points to 1,060.61 as the widely-watched Standard & Poor's/Case-Shiller home price index of 20 major cities rose 1.2 per cent from June. Though home prices are still 13.3 per cent below July a year ago, they have risen for three months straight.
The index is down about 33 per cent from the peak in mid-2006. Home prices are now at levels not seen since the third quarter of 2003.
Stock markets lost ground last week, with the TSX down more than two per cent, as economic data disappointed investors at a time when the strong market advances since early March have sent the Toronto market soaring more than 50 per cent.
"These are going to be very emotional markets," Mastracci said.
"The data that we've seen is actually not too bad but I think when we had low expectations, it wasn't too hard to please us. I think the bar has been raised now."
Market heavyweight Research In Motion Ltd. (TSX:RIM) was also supportive, up $1.22 to C$73.41 after losing about 20 per cent over the last two sessions after delivering revenue and outlook disappointments.
In other corporate news, Corus Entertainment Inc. (TSX:CJR.B) delivered an optimistic outlook for the economy and the company. In an update for investors, Corus said its management is aiming for a consolidated profit of $255 million to $270 million in fiscal 2010 and its shares ran up 74 cents to $17.54.
Royal Bank of Canada (TSX:RY) has an agreement to acquire an investment adviser servicing business from New York-based J.P. Morgan for an undisclosed price. The business unit will be renamed and become part of RBC Advisor Services, which is a unit of RBC Wealth Management's U.S. division. Royal shares fell 50 cents to $57.50.
U.S. drugstore operator Walgreen Co. said Tuesday its fourth-quarter profit fell two per cent, but prescription drugs drove sales higher and the results topped Wall Street expectations. Its shares surged $3.16 or 9.24 per cent to US$37.35.
Investors took in a grim warning from General Electric Co. chief executive Jeffrey Immelt that high unemployment and slower lending will drag on U.S. economic growth, likely resulting in the weakest recovery in decades.
Immelt suggested the world's largest economy could be facing its slowest recovery from a recession since before the 1970s as increased government regulation and bank consolidation pinch off available credit.