Daily Market Commentary

Weekly Stock Market Update
(Week of November 16 - November 20, 2009)
 
The Stock Market
 
The TSX Composite ended the week at 11,579, up 1.5% for the week.  The TSX is up 28.8% year-to-date. Basic material stocks led the advancers for the week, while technology stocks led the decliners. The S&P 500 ended the week down 0.2% at 1091 and is up 20.8% year-to-date. Including currency effects, the S&P 500 is up 6.2% in Canadian dollars.
 
The Canadian dollar fell 1.62 cents to close at 93.47 U.S. cents.
 
The yield on the 10-year GOC fell 0.10% to 3.38%.  The U.S. 10-year Treasury bond fell six basis points (0.06%) to end the week at 3.38%.
 
Economic Update

Wholesale sales rose less than expected in September, increasing 0.2% compared to August, due to a gain in machinery and electronic equipment. Manufacturing sales rose 1.4% in September compared to the month prior, slightly less than expectations for a 1.7% gain and completely due to a rebound in automobile and part sales.  Excluding the auto sector, sales fell 0.4%. The consumer price index unexpectedly fell 0.1% in October compared to September. Compared to the year prior, prices rose 0.1%, the first increase following five straight months of annual declines.

Core inflation accelerated to a 1.8% annual increase from a 1.7% increase in September. Leading indicators jumped 0.7% in October from September, as expected, for the fourth straight increase. The rise was broad-based, as eight of the ten components expanded. U.S. leading indicators rose 0.3% in October from September, the seventh straight increase, albeit the smallest. Expectations were for an increase of 0.4%.
 
Summary

Stocks ended the week higher, led by the advance in the basic materials sector. Leading indicators, which point to the direction of the economy over the next three to six months, increased for the fourth consecutive month in Canada and rose for the seventh consecutive month in the U.S.  We remind you to stay true to solid investment principles and not get caught up in
predictions about where the economy is headed.  Instead, focus on holding quality investments that tend to better weather the ups and downs in the market over the long term.
 
Upcoming Week

November 23: Retail Sales (SEP)
November 23: U.S. Gross Domestic Product (Q3 - revised)
November 24: U.S. Case-Shiller Home Price Index (SEP)
November 24: U.S. FOMC Minutes
November 27: Current Account (Q3)

Kate Warne, Ph.D., CFA,  Canadian Market Strategist

Doug Stine, Research