North American stocks turned in modest gains Wednesday, with U.S. financials rallying but Apple Inc. shares taking a beating.
The S&P 500 closed at 1409.28, up 2.23 points or 0.2 per cent. The blue-chip Dow Jones industrial average closed at 13,034.49, up 82.71 points or 0.6 per cent. In Canada, the S&P/TSX composite index closed at 12,157.29, up 20.11 points or 0.2 per cent.
The U.S. economy generated a nice surprise early in the day: The Institute for Supply Management reported that its non-manufacturing index in November rose to 54.7, up from 54.2 in October and well ahead of economists' expectations for a drop to 53.5.
Yet, Washington continued to wrangle over the U.S. budget, extending a period of uncertainty. President Barack Obama said that he would not tie budget negotiations to an extension of the debt ceiling, while House speaker John Boehner called for a revised offer from the Obama administration.
The budget talks, which have been showing little progress, come as some investors fret over the economic implications of the so-called "fiscal cliff" of automatic tax increases and spending cuts should Washington fail to reach an agreement before the end of the year.
Citigroup Inc. rose 6.3 per cent after saying that it would take a $1-billion (U.S.) charge in connection with the elimination of 13,000 positions. However, other financials saw gains as well: Bank of America Corp. rose 5.6 per cent.
Apple fell 6.4 per cent, marking its biggest one-day decline in more than a year. The severity of the pullback had many observers scratching their heads. One potential explanation: China Mobile Ltd. said that it would carry a Nokia phone based on Windows 8, continuing to shut out Apple from China's largest wireless carrier.
Rival Nokia jumped 12.8 per cent in New York. Resarch In Motion Ltd. also gained, rising nearly 3 per cent in Toronto, adding to the impression that investors believe Apple's iPhones are becoming vulnerable to competition from other smartphone makers.
Primaris Real Estate Investment Trust rose 14.6 per cent after a consortium led by KingSett Capital made a $4.4-billion offer for it, marking the biggest-ever deal for a Canadian-listed REIT.
Among commodities, crude oil fell to $87.88 (U.S.) a barrel, down 62 cents. Gold fell to $1,693.80 an ounce, down $2.
Among Canadian commodity producers, Suncor Energy Inc. rose 1.3 per cent and Barrick Gold Corp. fell 2.4 per cent.
Freeport McMoRan Copper & Gold Inc. said it would expand into the energy sector with a plan to buy Plains Exploration & Production Co. and McMoRan Exploration Co. for a combined $9-billion. Freeport shares fell 16 per cent.