Rising U.S. consumer confidence and further signs of a stabilizing housing market

Flu gets bumped

RTGAM


Rising U.S. consumer confidence and further signs of a stabilizing housing market helped offset concerns at the outset of trading on Tuesday, leaving major North American stock market indexes little changed for the day.


The Dow Jones industrial average closed at 8016.95, down 8.05 points, or 0.1 per cent. The broader S&P 500 closed at 855.16, down 2.35 points, or 0.3 per cent.


Both indexes had begun the day looking vulnerable to a steep selloff after the Wall Street Journal reported that government stress tests had left regulators convinced that Bank of America Corp. and Citigroup Inc. would require more capital. Bank of America fell 8.6 per cent and Citigroup fell 5.9 per cent.


As well, rising concerns about swine flu had hit indexes in Europe and Asia, with investors concerned that the already weak global economy could be hurt even more if travel restrictions were imposed.


However, those concerns fell largely by the wayside after the Conference Board's consumer confidence index jumped unexpectedly in April, even though the survey was likely done before anyone had even heard of the swine flu. As well, the S&P Case-Shiller home price index showed that U.S. home prices deteriorated at a slower pace in February.


International Business Machines Corp. rose 2 per cent, Kraft Foods Inc. rose 1.9 per cent and Exxon Mobil Corp. rose 1.4 per cent.


General Motors Corp. fell 11.3 per cent a day after the struggling auto maker presented its latest plan for avoiding bankruptcy protection. This suggests that investors are having second thoughts about whether the plan - which would leave the U.S. government as the controlling shareholder - will work.


In Canada, the S&P/TSX composite index closed at 9348.03, down 46.77 points, or 0.5 per cent. Gold producers were weak after the price of gold fell to $893.60 (U.S.) an ounce, down $14.60. Barrick Gold Corp. fell 2.9 per cent and Goldcorp Inc. fell 2.5 per cent.


Energy stocks were also generally weak, even though the price of crude oil recovered from a deep dip earlier in the day, ending at $49.92 a barrel, down just 22 cents. Canadian Oil Sands Trust fell 6 per cent and Canadian Natural Resources Ltd. fell 3.2 per cent.


Financials were mixed. Canadian Imperial Bank of Commerce rose 1.2 per cent but Manulife Financial Corp. fell 1.6 per cent.

Copyright 2001 The Globe and Mail