TORONTO - North American stock markets recaptured their recent optimism and moved higher Thursday on stronger-than-expected profit reports and rising energy prices.
The S&P/TSX composite index rebounded 221.39 points to 10,676.72, while the Canadian dollar was at 92.23 cents US, up 0.55 of a cent.
The upswing ended two days of weakness driven by investor pessimism about the economic recovery.
Much of those concerns were put aside as commodities rebounded, sending the energy sector ahead 2.4 per cent.
Light, sweet crude for September delivery closed up $3.59 to US$66.94 a barrel on the New York Mercantile Exchange, logging its biggest gain since April 9.
Petro-Canada (TSX:PCA) said that weaker oil prices took a bite out of its profits, which sharply dropped to C$77 million in the quarter, from $1.498 billion a year ago. Its shares rose $1.89 to $44.60.
However, earnings from other companies were decidedly stronger. Both Barrick Gold Corp. (TSX:ABX) and Canadian Pacific Railway Ltd. (TSX:CP) reported modest increases in second-quarter profits. Canadian Pacific stock was up 12 per cent to $48.61.
TSX mining stocks were one of the lead gainers, up 3.6 per cent, with Teck Resources Ltd.(TSX:TCK.B) closing ahead 7.6 per cent to $27.25. Metals stocks were up 5.9 per cent.
The gold sector was up 2.3 per cent as bullion for August rose $7.70, to end at US$934.90 on the Nymex.
The TSX Venture Exchange 15.30 points to 1,147.04.
On Wall Street, the Dow Jones industrials were ahead 83.74 points to 9,154.46, well off an intraday surge of 112 points.
The Nasdaq composite rose 16.54 points to 1,984.30 while the S&P 500 index gained 11.60 points to 986.75.
The U.S. Labour Department reported that the number of Americans continuing to collect unemployment benefits unexpectedly fell last week to 6.2 million, though the increase was mostly tied to seasonal distortions.
In other Canadian earnings, Bell Aliant Regional Communications Income Fund (TSX:BA.UN) says its operating unit generated net profits of $89.3 million in the second quarter, up from $84.4 million in the comparable period. Units were up 24 cents to $26.55.
However, Gareth Watson, associate director and Canadian equity adviser at Scotia McLeod, said it's easy to wrongly jump on the bandwagon of corporate earnings optimism.
"If you look at some of the companies... they've only beaten expectations because they beat earnings, but they didn't beat revenues," he said.
"They beat because they cut costs, not because they grew their business. That, to me, is concerning -- that people are interpreting better earnings as indicating that revenue growth has returned."
In other corporate developments, Air Canada (TSX:AC.B) shares soared 23 per cent to $2 a day after the cash-strapped airline announced it has lined up more than $1 billion in financing.
In the pulp and paper industry, Catalyst Paper (TSX:CTL) said a tougher market and higher loonie were to blame for a second-quarter loss of $1.9 million. The company also took a pessimistic view for growth during the rest of this year, while its shares rose 12.5 per cent to 18 cents.
Forestry company Tembec Inc. (TSX:TMB) says that it will likely experience further significant paper down time at its operations in the coming months as falling newsprint prices continue to add pressure. Shares rose two cents to 55 cents.
