Gurus speak, investors buy late in the day

The close: Gurus speak, investors buyRTGAMA global recession has not been averted and the financial system is not humming again. But after yet another deep stock market rout early on Thursday, investors couldn't sit on the sidelines any longer: They stepped back into the market, sending U.S. stocks up and erasing most of the losses in Canada.It only helped that prominent voices from the professional investment community - some of them notoriously bearish until recently - are suggesting that the low markets are a gift to long-term investors.Jeremy Grantham, chairman of GMO, told Reuters: "The early purchases will be painful.

But if you could slice in and do some buying before and after the low, seven years from now you will not regret it."Chris Orndorff, managing principal at Payden & Rygel Investment Management, told Reuters: "Things have just gotten a bit silly. We are very, very close to a bottom in equities."John Hussman, Hussman Funds, in a note to investors: "On nearly every measure - sentiment, valuation, volatility, oversold conditions, and others, we are observing extremes associated with strong expected return/risk profiles, on average. My impression is that investors underestimate the potential for a very rapid 20 to 25 per cent market advance as risk aversion collapses."Somebody listened.

The Dow Jones industrial average closed at 8979.26, up 401.35 points or 4.7 per cent. From its low point earlier in the day, the index rallied 780 points. Of the 30 stocks in the index, 27 rose. The broader S&P 500 closed at 946.43, up 38.59 points or 4.3 per cent.Exxon Mobil Corp. rose 11.4 per cent, Wal-Mart Stores Inc. rose 9.1 per cent, Microsoft Corp. rose 6.8 per cent and General Electric Co. rose 3.3 per cent. Citigroup Inc. missed out on the rally, falling 2 per cent.In Canada, the S&P/TSX composite closed at 9269.97, down 53.88 points or 0.6 per cent.

But this is a case where down looks up: The index rallied more than 500 points from its low. The winners included Royal Bank of Canada, up 1.5 per cent, and Research In Motion Ltd., up 4 per cent.Even though the price of crude oil fell below $70 (U.S.) a barrel, closing in New York at $69.85, a number of energy producers performed well. Canadian Oil Sands Trust rose 10.6 per cent and EnCana Corp. rose 5 per cent. Gold producers, however, were hit hard by a low reading of U.S. inflation in September, which sent the price of gold down to $804.50 an ounce. Barrick Gold Corp. fell 12.5 per cent and Goldcorp Inc. fell 10.9 per cent.Copyright 2001 The Globe and Mail

TSX Drops 310 Points

he TSX Venture Exchange was off 43.23 points to 947.98.
The Dow Jones industrial average, down well over 300 points late in the morning, but was off just 36.8 points to 8,541.11 at mid-afternoon Thursday after tumbling 733 points the previous day in its worst one-day plunge since 1987.
The Nasdaq composite index was ahead 6.12 points to 1,634.45 following a 151-point loss Wednesday while the S&P 500 index declined 8.3 points to 899.54 after losing 90 points in the prior session.
"There is some good news and a lot of bad news and I think if there is any type of bad news in anything that comes out, that's really what people are focusing on – which is indicative of a bear market really," said Jennifer Radman, associate portfolio manager at Caldwell Securities.
"You still have a lot of deleveraging going on, which means there are people out there that just have to sell regardless of what the value of their stock is worth."
The latest dive in the price of oil helped send the Canadian dollar down 0.15 of a cent to 84.03 cents U.S., while the latest snapshot on manufacturing showed a sharp deterioration in sales.
Statistics Canada reported that manufacturing sales declined 3.7 per cent to $52 billion in August. The slide was led by the petroleum and coal sectors, but declines were widespread as the transportation equipment industry fell 4.3 per cent.
The Philadelphia Federal Reserve said Wednesday that regional manufacturing conditions weakened in October. The bank's regional index came in at a negative 37.5 compared with a positive 3.8 for September.

In other U.S. economic news, industrial production plunged 2.8 per cent last month, on top of a one per cent drop in August.

The Federal Reserve estimated that disruptions related to the hurricanes accounted for about 2.25 percentage points of the total drop in industrial production in September.
Also, consumer prices were flat last month rather than increasing as forecast. And claims for unemployment benefits fell by 16,000 last week to a seasonally adjusted level of 475,000 – a greater decline than anticipated.

While the credit markets are performing better than they were last week given unprecedented support by governments, they are hardly operating normally.

The ultra-safe three-month U.S. Treasury bill was yielding 0.44 per cent, higher than the 0.20 per cent reading on Wednesday.

The Toronto stock market's energy sector was down just over three per cent after plunging 12 per cent Wednesday. The November crude contract on the New York Mercantile Exchange was down $4.21 at US$70.33 – after earlier slipping below US$70 for the first time since August 2007 – as new data showed much higher oil inventories in the U.S. last week.
EnCana Corp. (TSX: ECA) eased five cents to $44.25 as RCMP are investigate a second explosion targeting a gas pipeline near Dawson Creek, on the B.C.-Alberta border, belonging to the energy giant.
Suncor Energy (TSX: SU) lost $1.78 to $23.21.


Oil has lost more than half its value in three months from its July peak of US$147.27.
Other commodities were lower with the December copper contract on the Nymex down 12.5 cents to US$2.0855 a pound after Rio Tinto PLC, one of the world's biggest mining giants, warned of slowing demand from China, the world's biggest growth engine over the last few years.

"The Chinese economy is pausing for breath after spectacular GDP growth," the company's chief executive Tom Albanese said.

Teck Cominco Ltd. (TSX: TCK.B) retreated 86 cents to $14.60.

Gold declined $34.50 to US$804.50 an ounce, sending the sector down more than 10 per cent.
Goldcorp Inc. (TSX: G) fell back $3.97 to $23.81.

NovaGold Resources Inc. (TSX: NG) faded 74 cents to $3.99 after it reported a record third-quarter profit of $16.7 million on a $33.5-million pre-tax gain from the sale of its NovaGrernPower unit.
Other materials stocks dragging the TSX lower included Potash Corp., (TSX: POT) down $11.42 to $81.15.
The TSX financial sector was down 2.5 per cent, with Scotiabank (TSX: BNS) $1.26 lower to $42.24.

Losses for Canadian insurers were much steeper with Manulife Financial (TSX: MFC) down $1.95 or 6.5 per cent to $27.10.

In the U.S., Citigroup Inc. posted its fourth straight quarterly loss due to credit-related troubles and cut another 11,000 jobs during the third quarter. The company lost US$2.8 billion in the quarter compared with a year-ago profit of US$2.2 billion. The loss was narrower than analysts had expected but its shares fell 82 cents to US$15.41.

Merrill Lynch & Co., which has agreed to be acquired by Bank of America Corp., posted a quarterly net loss of US$5.1 billion and its shares gave back 86 cents to $17.38.

The FTSE 100 index was down 218.2 points or 5.35 per cent to 3,861.39 in London
despite more action by the Bank of England to free up lending. Germany's DAX was down 4.9 per cent while the French CAC-40 lost 5.9 per cent.

In Asia, Tokyo's Nikkei slid 1,089.02 points to 8,458.45, its biggest drop since the 1987 stock market crash.
South Korea's main index dropped 9.25 per cent and Hong Kong's key index closed down 4.8 per cent.