The Stock Market At Close – Tuesday, May 9

The Toronto Market

The TSX composite index was practically unchanged as at market close today. The index actually gained technically – about half a point. The TSX today ended up 0.58 of a point to close at 20,585.73.

The market appears unable to make up its mind as to which direction to trend and is as such waiting for some event or trigger to trend it up or down. We might actually get such a trigger tomorrow at 8:30am when the US Consumer Price Index for the previous month is released. If the inflation report calls for continued interest rate hikes then some small hell may break loose with the markets tomorrow. The TSX will of course ultimately follow the US markets.

The TSX recovered from an early morning decline. The gains by the energy and industrial sectors helped the recovery while also offsetting the weakness in financials. The financial sector, which accounts for 28% of the index’s weighting, was down 0.6%. Industrials rose 0.5% and energy was up 0.4% as the price of oil settled 0.8% higher at $73.71 a barrel. The TSX opened roughly 180 points below yesterday’s closing value.

Major U.S. stock indexes closed lower as investors grew more cautious ahead of tomorrow’s U.S. consumer price index report and also a meeting between U.S. political leaders to discuss the debt ceiling.

Today’s Statistics: Today, the decliners continued to outnumber the advancers. The ratio of declined issues to gaining issues was 1.30-to-1.00. In real numbers, 567 advancers to 736 decliners with 227 unchanged. There were 18 new 52 week highs and 16 new 52 week lows. The total volume of shares traded for gaining stocks was 134,050,229 or 48.8%; the total volume for declined stocks was 131,496,810 or 47.8% and 9,281,644 or 3.4% for “Unchanged”.

The US Market

It was a relatively mild day at the US markets today. As mentioned above, anxiety over what may happen when the CPI report is released tomorrow morning and the stalemate over debt ceiling negotiations may be causing investors to stay away from the market hence the decline in the total volume of shares traded today.

The Dow Jones index declined -56.88 points, or -0.17%, to close the session at 33,561.81. The S&P 500 declined -18.95 points, or -0.46%, to close at 4,119.17. The Nasdaq Composite declined -77.36 points, or -0.63%, to close at 12,179.55. The Nasdaq is staying well above the 12,000 mark. If it hangs there long enough it will eventually move higher especially if reports indicates some success with the fight to tame inflation.

Materials and technology led the decliners among the sectors but the industrial sectors gained.

On the potential debt crisis, “According to Treasury Secretary Janet Yellen in a note, should Congress fail to raise the debt ceiling, it would trigger a crisis.”

President Joe Biden is set to meet with several key members of Congress to discuss the path forward on the debt ceiling. Biden is expected to remain firm on his stance seeking an increase in the debt ceiling without spending cuts, but is reportedly open to discussing cuts as a “separate matter.”

Today’s Statistics: Today, on both the NYSE and the Nasdaq the decliners dominated. The ratio of declined issues to gaining issues on the NYSE was a 1.59-to-1. In real numbers, 2,346 decliners to 1,472 advancers with 324 unchanged.  On the NASDAQ, the ratio of declined issues to gaining issues was 1.37-to-1 or in real numbers, 1,870 advancers to 2,572 decliners with 442 unchanged.     

On the NYSE, there were 76 new 52 week highs and 98 new 52 week lows. The total volume for gaining stocks was 372,065,223 or 40.6%; the total volume for declining stocks was 520,074,637 or 56.8%; and 23,285,796 or 2.5% “Unchanged”.

On the Nasdaq, there were 87 new 52 week highs and 187 new 52 week lows. The total volume of shares traded for gaining stocks was 1,798,378,261 or 42.5%; the total volume for declining stocks was 2,370,031,210 or 56.1% and 59,244,319 for “Unchanged” or 1.4%.

Volume on the U.S. exchanges was 9.35 billion shares, compared with the 10.68 billion daily average for the full sessions during the past month.

Oil and the money markets: West Texas Intermediate crude oil increased 0.5% to $73.51 per barrel on Tuesday. Gold rose 0.4% to $2,041.90 per troy ounce, and silver was little changed at $25.83 per ounce.

10 –year Treasury Yield:  The US two-year yield rose 2.7 basis points to 4.04% on Tuesday, and the 10-year rate added one basis point to 3.53%.

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Stocks In The News/Stocks To Watch

Follow The Smart Money: You really do not need to know a lot to be a good investor but one “must have skillset” is knowing how to follow the “smart money”.

The Toronto Market

The major Canadian banks stocks declined. Royal Bank of Canada, Bank of Nova Scotia and Toronto-Dominion Bank were all in the red at market close today. Barclays, today, cut its price targets on the Canadian bank stocks.

The National Bank’s opinion on the Big 6 Banks’ Commercial Real Estate Portfolio reads, “After residential real estate, commercial real estate (CRE) is the biggest lending exposure on Big-6 balance sheets, at about 10% of total loans, writes National Bank’s Gabriel Dechaine. Not only is the portfolio large, but it has also grown faster than the overall wholesale portfolio over the past seven years.

Office exposures are particularly worrisome and represent 12% of the average Big-6 CRE book. Using historical precedents as proxies, Dechaine can see EPS downside risk in the high-single-digits or well over 20% for the banks.”

“With the CRE overhang and the ongoing turbulence in the U.S. regional banking sector that could trigger a recession, we believe most investors will maintain a cautious stance towards the Big-6 banks.”

CIBC and BMO charts follow:

If you think that some of the bank charts could be interchanged with each other, you would not be totally incorrect; the margin of error would not be much. The US regional banking crisis touched the banking industry. Where else could you see the bank charts in such close proximity for easy comparison? Only at The Canadian Vanguard! Be sure to visit the website often.

SNC-Lavalin Group Inc. rewarded its shareholders today with a 12.2% share price gain by delivering an upbeat quarterly report. The stock gained $3.90 to close the market session at $35.88 with 1.3M shares changing hands.

Suncor Energy Inc. (SU) declined 1% after the company reported quarterly results. Suncor stock dropped $0.40 to close at $39.58 with 7.8M shares traded.

Restaurant Brands International (TSX:QSR) has been added to our Canadian Beginner Investors watchlist.

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The US Market

PayPal Holdings Inc. (PYPL), yesterday raised its annual profit forecast to above Wall Street estimates, buoyed by its higher quarterly profit as margins improved on cost-cut measures and as consumers, undeterred by inflationary pressures keep shopping online.

The company’s payments volume rose 12% on a forex-neutral basis to $354.5 billion in the first-quarter ended March 31. The company said it now expects full-year adjusted profit to grow about 20% to $4.95 per share, above analysts’ average estimate of $4.88 per share.

PayPal has said in the past that it is focused on lowering expenses with executives cautioning that inflation was impacting discretionary consumer spending. Adjusted operating margin in the first-quarter came in at 22.7% compared with 20.7% last year. In January, the company said it would lay off 7% of its workforce, or about 2,000 employees in the backdrop of a high interest rate environment that has exacerbated fears around an upcoming recession.

PayPal’s revenue rose 10% on a forex-neutral basis to $7.04 billion in the first-quarter. The company earned a profit of $1.17 per share on an adjusted basis in first-quarter, compared with 88 cents last year.

Today, PayPal shares slumped 12.73%, the biggest drop on the S&P, after the company cut its full-year adjusted operating margin growth outlook even as it reported better-than-expected Q1 results. The stock declined -$9.61 to close at $65.90 with a volume of 68.5M shares traded.

PacWest Bancorp had another volatile day, leading losses in regional banks earlier in the session before closing up 2.35%. PacWest Bancorp (PACW) shares declined in late morning trading today, among other regional bank stocks, amid growing fears around the banking crisis. The stock rebounded in the early afternoon as seen in the chart below.

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Regular Market Day Features

Beginner Investor’s (Canadian stocks) Watchlist

We have replaced Bombardier Inc. with Restaurant Brand International in the Beginner Investors Canadian Stocks Watch list.

The Canadian Vanguard Chinese Stocks Watchlist

EV, Energy and Resource Stocks Watchlist at Today’s Market

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