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By Oliver Bertin
The Globe And Mail
Online Edition
Wednesday, November 5, 2003
North American markets killed time Wednesday
as investors waited for Internet giant Cisco
System Inc. to point them in the right direction.
Cisco — the keystone of the Internet
revolution and a bellwether technology stock — reported
after the markets closed Wednesday, giving
investors a pretty good indication of where
tech stocks are headed.
Adrian
Mastracci, investment counsel with
Vancouver
based ‘fee-only’ KCM Wealth Management,
says, "The market is putting all those
economic figures in perspective. Investors
are waiting to confirm what they have.”
As it turned out, the news was very good. Cisco
nearly doubled its first-quarter profits
from year earlier levels — to 15 cents
(U.S.) a share from 8 cents — while
sales rose 6 per cent.
"The markets are waiting for Cisco to
report," Scott Kinnear, a financial analyst
with MMS International in Toronto said earlier
in the day, adding that Cisco is an important
stock to watch because techs have taken a leading
role in the recovery.
But Mr. Kinnear told globeandmail.com that
it would take more than one technology stock
to wake up the market. He expects another desultory
day Thursday and perhaps a gangbuster on Friday,
when U.S. employment numbers are released.
In Toronto, the S&P/TSX composite index
was in the red for most of the day, but finally
pulled above water in the last hour of trading.
It closed up 3.99 points or 0.05 per cent at
7,867.68, while the TSX Venture Exchange composite
index gained 17.40 points to 1,608.75.
The New York markets were mixed. The Nasdaq
Stock Market crawled into the black just before
the close, up 1.41 points or 0.1 per cent to
1,959.37. The Dow Jones industrial average
finished in the red at 9,820.83 down 18 points
or 0.2 per cent. The broadly based S&P
500-stock index fell 1.43 points or 0.14 per
cent to close at 1,051.81.
The Canadian fell 0.21 cents (U.S.) to 75.05
cents.
"The market is putting all those (economic)
figures in perspective," said Adrian
Mastracci,
a financial adviser with KCM
Wealth Management Inc. in Vancouver, referring to the buoyant
U.S. GDP figures that came out last week. "The
markets are waiting to confirm what they have."
As for Cisco, Mr. Mastracci said it has taken
on such a huge importance because it is one
of the leading bellwethers of the tech sector. "Where
Cisco goes, so the market goes," he told
globeandmail.com.
Even with Cisco in the offing, it has been
a dull couple of days on North American markets.
Earnings reports are starting to tail off,
leaving few surprises, while a handful of economic
reports in recent days merely confirmed what
most people knew already — the U.S. economy
is finally picking up steam.
Molson Inc. cheered beer drinkers by reporting
a 0.3-per-cent jump in market share and a 17-per-cent
jump in second-quarter profits before markets
opened Wednesday, sending the share price up
20 cents (Canadian) or 0.6 per cent on the
TSX.
CAE Inc. continued to intrigue investors as
they awaited the aerospace company's second-quarter
results, due after the close Wednesday. CAE's
shares fell 27 cents or 4.6 per cent Wednesday,
giving back some of Tuesday's gains on news
of a contract win.
Auto parts maker Magna International Inc.
fell by 0.6 per cent after two subsidiaries
reported higher revenues in the third quarter.
Tesma International Inc. posted a 16-per-cent
rise in third-quarter profit, but Intier Automotive
Inc. suffered a 36-per-cent profit drop.
Shoppers Drug Mart Corp. rang up a 23-per-cent
jump in third-quarter profit Wednesday, citing
cost cuts and strong system sales. Investors
welcomed the news at Shoppers, the country's
largest drugstore chain, raising the stock
by 83 cents or 2.9 per cent.
CanWest Global Communications Corp. said it
may consider adopting an income trust format
for its newspaper assets to improve its balance
sheet, helping send shares up 2.4 per cent.
Shaw Communications Inc. announced a plan
after markets closed Tuesday to buy back up
to 5 per cent of its total class B shares.
That helped send the share price up 2 per cent.
In the United States, fashion house Tommy
Hilfiger Corp. reported a 6-per-cent rise in
second-quarter profit, ahead of analysts estimates.
The share price rose 8.6 per cent on the New
York Stock Exchange.
There were two significant economic reports
in the United States. The U.S. Commerce Department
said U.S. factory orders rebounded by 0.5 per
cent in September, adding confidence that the
U.S. economy is truly coming back. The bulk
of the September gains came from big-ticket
items such as cars, machinery and furniture.
That report was augmented by the U.S. Institute
for Supply Management, which reported its non-manufacturing
index rose in September, confirming that the
U.S. services sector is picking up, with solid
gains in hiring.
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