Fed outlook boosts stocks

TORONTO — Stock markets look set to build on the 2009 rally this coming week after U.S. Federal Reserve Board chairman Ben Bernanke said that the U.S. economy is on the verge of a long-awaited recovery from the worst recession since the Great Depression.

TORONTO — Stock markets look set to build on the 2009 rally this coming week after U.S. Federal Reserve Board chairman Ben Bernanke said that the U.S. economy is on the verge of a long-awaited recovery from the worst recession since the Great Depression.

His comment Friday came at the end of a volatile week that saw the Toronto market lose ground for a second week on worries centred around how much help the U.S. consumer and Asian economies will be in supporting a recovery.

And despite Bernanke’s upbeat assessment of the economy, there are still plenty of worries about the American consumer, which makes up a huge 70 per cent of the economy.

“I just don’t see any customers,” said Danielle Park at Venable Park Investment Counsel in Barrie, Ont.

“They’re literally so stressed out trying to juggle the debt they do have and are afraid about their jobs that they’e just looking at stuff going: ’don’t need it, drive on.”’

The Toronto market made headway following Bernanke’s comments, which also included a warning that despite much progress in stabilizing financial markets and trying to bust through credit clogs, consumers and businesses are still having trouble getting loans. The situation is not back to normal, he said.

Restoring the free flow of credit is a critical component to a lasting recovery.

The gain Friday left the Toronto market up 43 per cent from the start of the rally in early March and 20.5 per cent year to date.

It has also left analysts impressed with the resiliency of markets despite signs of a tough recovery and second-quarter earnings results that saw many companies beat earnings expectations but also reported revenue growth that came strictly from cutting back.

But some investors believe the sharp gains racked up so far can be improved on since “the evidence is there that economies have come out of recession,” said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ont.

“We came out of the (1980s) recession only to fall back into it. So it’s a very selective process that’s going on right now among the bullish investors, that I’m going ignore the past, I’m going to ignore the risk that commercial real estate could still drag the U.S. economy down.”

Positive news from the U.S. housing sector also improved sentiment at week’s end after the National Association of Realtors said sales of existing homes rose 7.2 per cent to a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June.

It was the fourth straight monthly increase and the highest level of sales since August 2007

“But inventories were unchanged — we still have nine and a half months worth of homes on the market unsold in the U.S. — in fact, condo inventories went up,” observed Pyle.

“So it’s very selective — they’re not looking at those things, just that sales are up, great, let’s run with it.”

Park said that she is bothered by the fact that the big gains seen on indexes this year means that investors have priced in a 50 per cent increase in corporate earnings next year.

“Maybe they will find other places to cut costs, and more people to layoff and that kind of thing, but once you have done that, if you’re going to grow earnings by 50 per cent you have to really pull some rabbits out of the hat,” she said.

“You need some actual sales. And I just don’t see the sales pickup the way people are hoping. I hate to be dark again but I just feel there’s something really spooky going on. It’s the low volume, it’s the speculation in China driving commodity prices. ”

Just Posted

Red Deer’s crisis line workers are busy dealing with multiple emergencies

Callers need everything from mental health counselling to their basic needs met

Restaurant Brands International announces executive changes and raises dividend

TORONTO — Restaurant Brands International Inc. raised its dividend as it announced… Continue reading

Puck and player tracking gets TV test at All-Star Weekend

Twenty-three years after Fox’s glowing puck made its debut, the NHL’s next… Continue reading

Some Alberta minor hockey players getting heat for Indigenous locker room dance

FORT MCMURRAY, Alta. — The Fort McMurray Minor Hockey Association has apologized… Continue reading

Not a fly-over province: Trudeau making frequent stops in Saskatchewan

LA LOCHE, Sask. — Prime Minister Justin Trudeau is set to visit… Continue reading

2-for-1: Total lunar eclipse comes with supermoon bonus

On Sunday night, the moon, Earth and sun lined up to create the eclipse, which was visible throughout North and South America

Arrest made in case of incapacitated woman who gave birth

A 36-year-old nurse has been arrested and charged with sexual assault

Edmonton Oilers fire general manager Peter Chiarelli: reports

EDMONTON — Peter Chiarelli has been fired as general manager of the… Continue reading

Canadian Milos Raonic has Australian Open run end in quarterfinals

MELBOURNE, Australia — Canadian Milos Raonic is done at the Australian Open… Continue reading

$20K pay gap between women, men in Canadian tech jobs

The report defines tech workers as people either producing or making extensive use of technology, regardless of industry

Two Quebec short-film directors mark first Oscar nominations together

TORONTO — Two Quebec filmmakers celebrated in solidarity on Tuesday after learning… Continue reading

Toronto illustrator teams up with Paul McCartney on children’s book

Toronto-based illustrator Kathryn Durst says she’s found a true collaborator in Paul… Continue reading

Catholic student says he didn’t disrespect Native American

Many saw the white teenagers, who had travelled to Washington for an anti-abortion rally, appearing to mock the Native Americans

Backlund scores OT winner for Calgary Flames in 3-2 win over Carolina Hurricanes

Flames 3, Hurricanes 2 (OT) CALGARY — Mikael Backlund scored 15 seconds… Continue reading

Most Read