S&P/TSX Higher As Investors Await Fed’s Tapering Plans

Disclosure: Robert Baillieul has no positions in any of the stocks mentioned in this article.

| More on:
The Motley Fool

North American equity markets finished higher on Monday on good economic data out of Europe and renewed hoped that the Federal Reserve’s bond buying program will be extended.

And it was mostly green on investors’ screens to start this week of trading. The S&P/TSX Composite Index (^OSPTX) closed up 58.17 points, or 0.45%, at 13,184. In the United States, the Dow Jones Industrial Average posted a 130 point gain, up 0.82%.

Data released on Monday showed Europe’s economic recovery is picking up momentum. The Eurozone’s flash composite PMI climbed to a three-month high of 52.1 in December from 51.7 in November- any number above 50 signals growth. This should keep sovereign debt worries on the backburner.

And with the U.S. Federal Reserve set to meet tomorrow, traders are betting on whether or not the central bank will continue its monetary stimulus measures. A poll released last week in the Wall Street Journal found that most economists don’t expect the Fed to taper its bond buying program until this spring. Through most of us here at Fool HQ will be happy to never hear the word ‘taper’ ever again.

While we typically don’t worry about day-to-day share price moments, we occasionally review them just in case they’re material to our investment thesis.

Barrick Gold (TSX:ABX, NYSE:ABX) led the TSX higher with shares of the gold miner up 1.63%. Investors were digesting a Saturday announcement that the company will lay off roughly 1,500 of its approximately 5,000 workers on the Argentine side of its suspended Pascua-Lama gold mine. Ramping down construction should save the company billions of dollars in construction costs.

However, I was much more concerned with a Sunday story published in the Globe and Mail that slipped beneath the radar. According to the report, Barrick is considering revamping its executive compensation scheme.

Previously, managers were compensated for growth and not required to actually own any shares. However, under the proposed new plan, executives could be required to hold onto the Barrick shares until retirement. This should better align the interests of management with shareholders.

Finally, Valeant Pharmaceuticals (TSX:VRX, NYSE:VRX) announced the acquisition of Solta Medical (NASDAQ:SLTM), a U.S. based company that makes medical devices used in cosmetic surgery procedures. Valeant offered $2.92 per share, a 40% premium to where the stock closed on Friday, valuing the company at $250 million.

This is likely to be another great acquisition for shareholders. Valeant has done a great job by buying up promising new medical technologies and exploiting its huge distribution to create value. It might be time to nickname this firm ‘Little J&J’.

Foolish bottom line
All eyes are on the Fed this week. Expect more sideways trading until we get an update on the central bank’s monetary policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Disclosure: Robert Baillieul has no positions in any of the stocks mentioned in this article. 

More on Investing

Pipeline
Dividend Stocks

Enbridge Is a High-Yielding Canadian Dividend Stock to Buy Now and Own Forever

Are you looking for a high-yielding Canadian dividend stock to buy? Enbridge (TSX:ENB) has plenty to offer investors.

Read more »

sale discount best price
Stocks for Beginners

3 TSX Growth Stocks You Can Buy at a Screaming Discount

These three growth stocks remain screaming buys, given their track records of growth and future opportunities for investors.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Why I’d Buy These 2 Healthcare Stocks Today (Besides the Cheap $10 Price)

Two small-cap stocks trading under $10 worth buying right now as promising healthcare plays in 2023.

Read more »

woman data analyze
Investing

Better Buy: Telus Stock or BCE?

Telus (TSX:T) and BCE (TSX:BCE) are dividend-growth stocks that seem like worthy pick-ups ahead of a recession year.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

3 Dividend Stocks to Build Wealth in the New Year

These dividend stocks have proven they're set up for a strong future and have dividends you'll want to lock up…

Read more »

Dad and son having fun outdoor. Healthy living concept
Tech Stocks

Prediction: These Will Be 2 of the Strongest TSX Stocks in 2023

Tech stocks may have dropped during the last few years, but these two TSX stocks are bound for major growth…

Read more »

edit Person using calculator next to charts and graphs
Tech Stocks

This 1 Tech Stock Is My Hands-Down Choice Over Shopify

A small-cap tech stock with consistent revenue growth and nearly 300% profit growth is a better option over the TSX's…

Read more »

money cash dividends
Top TSX Stocks

Sitting on Cash? These 2 TSX Stocks Are Great Buys

Given their solid business models and stable cash flows, these TSX stocks could be steady investments in this volatile market.

Read more »