Markets soar as financial, energy stocks jump
A powerful stock-market buying spree has continued for a third day, yielding triple-digit index gains in Toronto and New York driven by ongoing advances in financial and energy shares.
Toronto's S&P/TSX composite index jumped 271.25 points, or 3.4 per cent, to 8,282.207 yesterday – its highest close in three weeks – as six stocks rose for each that fell.
Toronto's key index has rallied 9.5 per cent over the past three sessions and some analysts said that even if it does retreat soon, it will not pierce the more than five-year low it touched late last week.
"So we're fairly close to a top here for the next day or two, but even if we do have a pullback in the next week or so, the lows should be a little higher," said Levente Mady, broker at MF Global Canada, in Vancouver.
The TSX Venture Exchange added 19.52 points to 843.42, while the Canadian dollar advanced 0.43 of a cent (U.S.) to 78.18 cents.
New York's Dow Jones industrial average moved ahead 239.66 points to 7,170.06, netting 9.5 per cent over three days.
The Nasdaq composite index in New York was up 54.46 points to 1,426.1 while the S&P 500 rose 29.38 to 750.74.
The turnaround in sentiment on the banking sector started with reports this week that U.S. financial giants Citigroup and JP Morgan had an operating profit in the first two months of the year.
Yesterday, Bank of America Corp. became the latest U.S. lender to say it started the year with a profit, adding to the market momentum.
Market gains have spread across most sectors, particularly energy as oil prices have firmed above $45 a barrel.
Analysts say the rally has also been fed by short covering, which occurs when investors are forced to buy stock to replace shares they borrowed and then sold on expectations of a decline.
Some say those reasons aren't enough for a sustainable revival in the market.
"Right now I just call this rally speculative," said Jennifer Dowty, portfolio manager at MFC Global Investment Management.
"We're having parabolic moves – stocks are up 8, 9 per cent in one day; I would rather see some stabilization and a slow re-acceleration justified with positive economic data," she said.
Eight of the TSX's 10 sectors ended the session higher, led by a 5.56 per cent rally in the financials index, up almost 21 per cent since Monday's close.
Energy stocks rose 5 per cent as the April crude contract on the New York Mercantile Exchange moved ahead $4.70 to $47.03 a barrel.
The April bullion contract was up $13.30 to $924 an ounce on the Nymex, and the TSX gold sector rose 3.25 per cent.
Industrials were also supportive and there were small declines in telecom and utilities stocks.
From the Star's wire services
