TSX shakes off early losses while Wall Street walloped by weak earnings

TORONTO — The Toronto stock market recovered from a triple-digit slide to close modestly higher amid rising oil and gold prices and a solid earnings report from Canadian grocer Metro Inc.[np_storybar title=”The real reason why interest rates in Canada and around the world are so low” link=”https://business.financialpost.com/2015/01/26/the-natural-rate-of-interest/”%5DMichael Walker: It’s time to abandon the notion that world interest rates are going back up to historic levels. Interest rates are low because of demographics — an aging population of savers creates a borrower’s market. Keep reading. [/np_storybar]The S&P/TSX composite index closed up 36.05 points at 14,833.88.Metro’s quarterly net income was up 13.4% from a year ago to $112.5 million. Adjusted earnings were $1.35 per share, four cents above estimates, while sales were up 5.2% to $2.84 billion.Metro also announced a three-for-one stock split and a dividend hike. Metro shares advanced $3.99 or 4.1% to $101.25 after hitting an all time high of $104.03.Canadian National Railway (TSX:CNR) close down 28 cents to $85.16 ahead of earnings. After the close those earnings came in at $1.03 per share, six cents ahead of estimates.CN also boosted its quarterly dividend 25% to 31.25 cents a share and said its operating ratio — a measure of efficiency — improved by 4.1 points to 60.7%. The full-year 2014 operating ratio improved by 1.5 points to 61.9%.The Canadian dollar rose 0.39 of a cent to 80.62 cents US.The selling pressure was particularly fierce in New York amid disappointments from corporate heavyweights including Caterpillar and Microsoft.Caterpillar Inc’s brutal quarter: Profit drops 25% from year earlier as depressed commodity prices biteRecord quarter for Apple Inc? 5 things to watch for in tech giant’s earningsMicrosoft Corp business software-license sales fall short of estimatesThe Dow industrials plunged 291.49 points to 17,387.21, the Nasdaq lost 90.26 points to 4,681.5 and the S&P 500 index fell 27.53 points to 2,029.56.Traders also took in a disappointing reading on U.S. durable goods orders for December. They fell 3.4%, led by a 55.5% plunge in the volatile commercial aircraft category.But there was also weakness in a number of areas, with demand for machinery, computer and primary metals all down.Caterpillar Inc. posted earnings, adjusted for restructuring costs, of $1.35 per share, widely missing expectations of $1.55 a share. Revenue of $14.24 billion beat forecasts for $14.18 billion but its shares dropped six per cent as the heavy machinery manufacturer delivered a disappointing outlook as the commodities super cycle ground to a halt.Its shares fell 7.2% to US$79.85, leaving some analysts puzzled why markets would be surprised that Caterpillar would have a soft outlook.“It’s not a surprise. I mean the majority of Caterpillar’s growth over the last multiple years has come from international sources _ why would we be surprised at this?” asked Brian Belski, Chief Investment Strategist at BMO Capital Markets.“My theory is there is a general reluctance for investors to let go of the international growth story.”And Microsoft shares fell 9.25% to $42.66 despite meeting profit expectations and beating revenue forecasts for the latest quarter. JPMorgan downgraded the company to neutral from overweight and reduced its price target to US$47 from $53. A group of analysts at the brokerage said the downgrade reflected Microsoft’s spending projections, saying the company will not exercise as much spending discipline as anticipated.Traders also looked to the Federal Reserve and its interest rate announcement on Wednesday.TSX losses were minimized by a 3.3% gain in the gold sector as bullion gained $12.30 to US$1,291.70 an ounce.Oil prices were $1.08 higher to US$46.23 a barrel and the energy sector was up one per cent.The base metals sector led declines, down 0.85% as a strengthening greenback and demand concerns from China pushed copper down eight cents to a fresh 5 1/2 year low of US$2.46 a pound.