North American stocks were mixed in early trading Friday as the Toronto market gained following a report showing inflation slowed in Canada in December, while U.S. stocks fell as weaker-than-forecast results from United Parcel Service Inc. overshadowed confidence that central banks will support global growth.
The S&P/TSX composite index was up 50.72 points to 14,814.70.
The Canadian dollar was off 0.03 of a cent to 80.59 cents US as Statistics Canada reported retail sales rose 0.4 per cent to $43 billion in November. Economists had generally expected a decline.
In New York, the Dow Jones industrial average was off 62.84 points to 17,751.14, the S&P 500 fell 6.82 points to 2,056.33, and the Nasdaq edged up 3.57 points to 4,753.97.
UPS slumped 8.5 per cent as it said preliminary 2014 earnings were lower than previously forecast, citing the underperformance of the U.S. market and higher costs related to peak season deliveries. Kimberly-Clark Corp. dropped 4 per cent after forecasting 2015 earnings that missed estimates. Starbucks Corp. jumped 5 per cent as new food and holiday drinks boosted customer traffic and sales.
The Stoxx Europe 600 Index rallied 1.7 per cent a day after the European Central Bank expanded its stimulus plan.
"The ECB is still going to be at the forefront over the next few trading days," Matt Maley, an equity strategist at Miller Tabak & Co. LLC in Newton, Massachusetts, said in a phone interview. "People are still trying to digest this bazooka blast. Obviously earnings will become more of a focus as well but the key is we need follow-through. It was a nice rally yesterday, but we've had a lot of one-day rallies that didn't really pan out."
Canadian inflation slowed to 1.5 per cent in December as cheaper gasoline countered accelerating prices on most other items, reinforcing Bank of Canada Governor Stephen Poloz's argument the economy needs lower interest rates.
The core inflation rate, which excludes eight volatile products such as energy, quickened to 2.2 per cent from November's 2.1 per cent pace, Statistics Canada said today from Ottawa. Economists in a Bloomberg News survey forecast the total rate would slow to 1.6 per cent from 2.0 per cent and core prices would rise 2.3 per cent.
Poloz surprised markets two days ago by cutting the bank's key rate to 0.75 per cent saying the plunge in world oil prices would slow inflation to 0.3 per cent in the second quarter. The central bank may act again to reduce rates if the world's 11th largest economy shows more signs of weakening, he said.
Nick Exarhos, an economist at CIBC World Markets in Toronto, said today's inflation reading supports the central bank's decision to lower rates.
"They've made their move, Exarhos said in a telephone interview. "They don't see inflation posing a threat to what is really more accommodative policy."
The S&P 500 gained 2.2 per cent this week through yesterday, erasing its losses for the year following two retreats that lasted five days amid tumbling oil prices and concerns that the global economy is slowing. The index is 1.3 per cent from its all-time high reached Dec. 29.
U.S. stocks rose for a fourth day on Thursday, extending the longest rally of the year, as the ECB expanded an asset-purchase program to include government bonds. Banks and transportation companies also pushed benchmark gauges higher on better-than-forecast earnings.
ECB President Mario Draghi said the central bank plans to buy up to €60-billion ($68-billion) of private and public securities a month. A near-stagnant economy and the risk of deflation forced Draghi's hand six years after the Federal Reserve took a similar step to inject cash into the U.S.
"Yesterday's reaction to the ECB was very strong, so it only makes sense for markets to take time to digest the implications of new policies," said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG in Bonn. "People are turning more positive on Europe, and more optimistic regarding global economic growth."
In the U.S., three rounds of Fed stimulus helped the S&P 500 more than triple from a bear-market low in March 2009. The central bank ended its quantitative easing program three months ago.
U.S. economic activity fell in December, according data from the Federal Reserve Bank of Chicago released Friday. The Chicago Fed national index, which draws on 85 economic indicators, was minus 0.05 in December versus 0.92 in November. A reading below zero indicates below-trend-growth in the national economy and a sign of easing pressures on future inflation.
Preliminary data on American manufacturing may provide further clues about the strength in the world's largest economy. Output probably expanded at a faster pace this month, economists predicted. A separate report will probably show sales of existing homes increased in December.
With files from The Canadian Press