The Toronto stock market headed higher Thursday afternoon after the U.S. Federal Reserve delivered on expectations for more help keeping the fragile economic recovery going.
The S&P/TSX Composite index leaped 127.54 points, or 1%, to end Thursday at 12,360.16, after the U.S. Federal Reserve said it will spend $40 billion U.S. a month on a new round of bond purchases to boost the weak economy, and has not set an end date.
The money will be spent on mortgage-backed securities to keep interest rates low, encourage lending and support the slow recovery of the housing sector.
The bank will also continue to buy long bonds under its so-called twist program, leaving them buying a total of $85 billion U.S. per month for the balance of the year under the two programs.
The Canadian dollar screamed higher by 0.82 cents to 103.26 cents U.S.
The gold sector led TSX gainers, as Barrick Gold Corp. was up $1.48 to $40.23 while Goldcorp Inc. jumped $1.91 to $43.92.
The base metals sector rose with December copper ahead two cents at $3.71 U.S. a pound. Teck Resources rose 90 cents to $31.52 and First Quantum Minerals climbed 74 cents to $22.82.
The energy segment was up. Prices advanced after attacks on U.S. diplomatic missions and the killing of the U.S. ambassador to Libya sparked new worries about unrest in the Middle East. Canadian Natural Resources advanced 92 cents to $32.88 and Cenovus Energy gained 84 cents to $34.93.
The TSX financial sector also provided lift to the market as Manulife Financial gained 52 cents to $12.10 while Sun Life Financial was up 54 cents to $23.61.
The U.S. Department of Justice is asking satellite technology company MacDonald, Dettwiler and Associates Ltd. to shed some more light on its $875-million U.S. takeover bid for California-based Space Systems/Loral Inc. The deal, which the company has called "a game changer" will boost MacDonald, Dettwiler’s role as a supplier of commercial communications satellites. MacDonald, Dettwiler shares lost $3.16 or 5.9% to $50.66 on top of a 7% slide on Wednesday.
In other corporate news, shares in travel company Transat AT Inc. surged 92 cents or 23.1% to $4.91 as it reported quarterly profit of $9.4 million or 25 cents a share, compared to a year ago loss of $2.8 million. Revenue was down 3% from a year earlier to $909.1 million.
Empire Company Ltd. says its first-quarter profit rose to $108.9 million or $1.60 per share, up from $89.2 million or $1.31 per share a year earlier.
The Nova Scotia-based company is best known for its Sobeys grocery stores but it also is involved in other retail operations, movie theatres and real estate. Revenue for the company was up 9.7% to $4.56 billion, thanks in part to the acquisition of 236 retail gas locations and convenience stores and its shares gained 45 cents to $58.03.
In the economic docket, Statistics Canada’s New Housing Price Index rose 0.1% in July, after a 0.2% increase in June.
The agency also said that Canadian industries operated at 81.0% of their production capacity in the second quarter, up 0.5 percentage points from the previous quarter. The manufacturing and non-manufacturing sectors made comparable contributions to the increase.
ON BAYSTREET
The TSX Venture Exchange grew 20.24 points to 1,302.89
In all, 10 of the 14 Toronto subgroups were higher on the day. Gold triumphed 3.6%, while materials gained 3%, and the metals and mining group moved higher by 2.6%.
The four laggards were weighed mostly by information technology, off 1.2%, telecoms, down 1%, and utilities, down 0.8%.
ON WALLSTREET
A rally on Wall Street gained momentum Thursday afternoon, sending stocks to fresh multi-year highs, as investors welcomed the Federal Reserve's new bond-buying plan.
The Dow Jones Industrial average zoomed 206.51 points, or 1.6%, to close at 13,539.90
The S&P 500 index gained 23.43 points, to 1,459.99 and the tech-heavy Nasdaq Composite Index added 41.51 points to 3,155.83.
The day's gains pushed the Dow and S&P 500 to their highest levels since December 2007, while the tech-heavy Nasdaq is trading at its highest level since November 2000.
Financial stocks led the broad rally, with the KBW Bank index climbing 4% to its highest level since May 2011. Bank of America's nearly 4.5% advance led the Dow higher, while JPMorgan's 3.9% rise helped the stock fully recover the losses it suffered following the 'London whale' disclosure.
The Fed said it will buy $40 billion U.S. of mortage-backed bonds each month for however long it deems necessary. In the past, the Fed has concentrated its purchases in Treasuries.
Housing stocks gained on the news. Shares of home builder Hovnanian rallied almost 5%, while Pulte Group rose 3%. Lennar and Toll Brothers gained almost 2%.
The Fed said it will continue to evaluate the strength of the economy in the coming months. The Fed also said it plans to keep interest rates at "exceptionally low levels" until mid-2015. Previously, the Fed had forecast rates would remain low until late 2014.
Shares of Facebook pulled back slightly from the one-month high reached a day earlier. Facebook's stock has gained nearly 13% over the past five days, but at $21 U.S., it's still a far cry from its IPO price of $38 U.S.
Apple's stock edged higher, a day after the tech giant unveiled the iPhone 5.
Aerospace companies BAE Systems and European Aeronautic Defence & Space Co said they were in merger talks Wednesday. Shares of both companies declined sharply Thursday.
Retailer Pier 1 Imports reported strong second-quarter earning Thursday morning and raised its full-year guidance, but shares slipped
On the economic slate, the U.S. Labor Department reported initial jobless claims increased to 382,000 for the week ended September 8, up 15,000 from the week earlier, and worse than expected.
The U.S. Bureaus of Labor Statistics reported producer prices rose 1.7% in August, marking the largest monthly jump since June 2009 and higher than expected.
The price on the benchmark 10-year U.S. Treasury gained back lost ground, bringing yields back up to Wednesday’s 1.76%. Treasury prices and yields move in opposite directions
Oil prices for September delivery progressed $1.05 to $98.07 U.S. a barrel.
Gold, which is used as a hedge against inflation, jumped 2% to hit a nearly seven-month high. The shiny metal gained $34.20 to $1,767.90 U.S. an ounce.
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