Market Wrap-Up August 21, 2008

The S&P/TSX composite traded higher this afternoon, up 189.08 points to 13,539.22, as crude oil prices continued to gain while investors also took in news of higher inflation in July. In corporate news, Nortel Networks Corp. shares rose 9 cents to $6.42 after it said it has acquired DiamondWare, whose technology has been deployed in gaming environments and in U.S. military tactical intercom systems, in a deal worth up to US$10 million. Nortel describes DiamondWare as a pioneer in 3-D positional voice technology.

Elsewhere, shares in Maple Leaf Foods moved down 32 cents to $10.27 as the company deals with a massive, nationwide recall of ready-to-eat meat products made by food giant Maple Leaf Foods. At least one person is dead and 16 others are ill across Canada from a bacterial infection that can be fatal to the infirm, the elderly and unborn children.

U.S. stocks finished mixed but mostly higher Thursday, as an analyst upgrade and speculation of a hostile bid boosted the shares of Lehman Brothers, while investors grew hopeful over a possible government bailout of mortgage giants Fannie Mae and Freddie Mac. The Dow Jones Industrial Average added 13 points to 11,430, and the S&P 500 was up 3 points at 1278. The Nasdaq, however, gave back 9 points to 2380. Among Dow components, oil giants Chevron and ExxonMobil both gained roughly 2 percent, as oil surged nearly 5 percent amid rising tensions over Russia’s military conflict with Georgia. Shares of Lehman Brothers also rebounded from earlier pressure after Ladenburg Thalmann analyst Richard Bove upgraded the stock, saying the stage was set for a hostile takeover of the firm. The stock finished down 0.1 percent at $13.72 after earlier slumping by more than 4 percent to $12.54.

As for corporate earnings, several consumer-oriented businesses announced financial results before the open. Heinz announced rising profits and trumped expectations, thanks to sales growth both domestically and overseas. Fast-food restaurant Burger King posted a 42 percent year-over-year increase in profits, beating estimates. The stock faced selling pressure, however, on declining profit margins.

On the data front, Canada’s inflation rate rose in July to its highest in more than five years, as the price of gasoline soared 28.6 per cent nationally compared with the same time last year. Statistics Canada says the annual inflation rate rose to 3.4 per cent in July from 3.1 per cent in June. Down south, the Labor Department’s initial jobless claims for the week ended Aug. 16 came in at 432,000, below economists’ expectations for a read of 438,000. The previous week’s unemployment tally was revised to 450,000 from 445,000. Also, the Philadelphia Federal Reserve manufacturing index increased to negative 12.7 in August, ahead of analysts’ estimates for a read of minus 13.4 and up from a negative 16.3 in July. The Canadian dollar, meanwhile, was up 1.56 cents to 95.79 cents US. U.S. light crude oil for October delivery rose $5.62 to $121.18 US a barrel on the New York Mercantile Exchange, with investors seeing the weaker U.S.dollar and the renewed worries about the economy as a reason to get back into commodities.

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