The S&P/TSX composite index rose 33.95 points to 12,507.60, while the Canadian dollar fell 0.19 of a cent to 98.12 cents US.
It was a different story on Wall Street, where the Dow Jones index retreated 42.47 points to 15,233.22 and the S&P 500 fell 8.31 points to 1,650.47. The Nasdaq dipped 6.38 points to 3,465.24.
The declines came after a reported speech by John Williams, president of the Federal Reserve Bank of San Francisco, who said the U.S. central bank will consider stopping its monthly US$85- billion bond purchases if the economy continues to improve.
The indexes were also driven down by a flurry of weaker-than-expected figures.
The U.S. Labor Department reported the number of Americans seeking unemployment aid rose by 32,000 last week to a seasonally adjusted 360,000, the most since late March. The jump comes after applications fell to a five-year low. The U.S. economy has added an average of 208,000 jobs a month since November but most of the job gains have come from fewer layoffs — not increased hiring.
"It does reflect a confluence of factors and some of it's the system drag we've been looking for and you're seeing creeping into the economy," said Bob Gorman, chief portfolio strategist with TD Wealth Management.
"It isn't the end of the world, but I do think it brings people back to the reality of the situation — that we have below average growth, not horrific but not great. And I think the market is reacting in a very muted fashion."
Meanwhile, U.S. officials also reported that inflation fell last month as a result of a 8.1 per cent drop in gasoline prices. The consumer price index was down 0.4 per cent in April from March. For the 12 months that ended in April, overall prices rose 1.1 per cent — the smallest year-over-year increase in 2 1/2 years.
The rate is still below the U.S. Federal Reserve's two per cent inflation target, which it says it needs to meet before ending quantative easing.
Meanwhile, the Commerce Department said U.S. builders started housing construction at a seasonally adjusted annual rate of 853,000 in April, a 16.5 per cent drop from the March pace of 1.02 million. But applications for building permits rose 14.3 per cent to a rate of 1.02 million, the highest in five years.
In corporate news, the world's largest retailer reported its first-quarter profit rose 1.1 per cent as it struggled with a sales slump. Wal-Mart Stores Inc. blamed a payroll tax increase, delayed tax refunds and bad weather for the profit and sales results that missed Wall Street expectations. It also offered a profit outlook that came in below analysts' projections. Its shares were down nearly two per cent, or $1.36, at US$78.50.
Gorman said Wal-Mart's dismal earnings may be showing the effects of increased Social Security taxes that kicked in earlier this year, resulting in consumers having less money for discretionary spending.
In Toronto, the industrials sector was the leading advancer, up by 1.21 per cent as shares by flight simulator and training company CAE Inc. (TSX:CAE) closed above its 52-week high by gaining more than six per cent, or 66 cents, to $11.26.
The Montreal-based company reported it earned $43.8 million or 17 cents per share for the period ended March 31, down from $53.2 million, or 21 cents per share a year ago. However, excluding $10.1 million of restructuring, integration and acquisition costs, it earned $53.9 million or 21 cents per share. Revenue in what was the company's fourth quarter grew to $587.9 million from $506.7 million last year.
Telus (TSX:T) announced that it was prepared to buy small wireless carrier Mobilicity as part of a $380-million deal. The purchase is subject to various conditions, including approval by the Competition Bureau and Industry Canada and by Mobilicity's debtholders. Telus shares climbing more than one per cent, or 39 cents, to $37.34
Commodity prices also showed some small gains. The June crude contract jumped 86 cents to US$95.16 a barrel, while July copper was up three cents at US$3.29 a pound. But June gold bullion dropped $9.30 to US$1,386.90 an ounce.