Investors heaved a sigh of relief from the U.S. Federal Reserve’s announcement that interest would stay put for a while, relief that translated into surges on indices on both sides of the border.
The S&P TSX Composite Index vaulted 143.97 points, or 1.2%, to end Wednesday at 12,539.21
The Canadian dollar regained 0.51 cents to 99.60 cents U.S.
The gold sector proved the shiniest, taking over the lead among gaining subgroups, as shares of Goldcorp Inc. grew $2.86 or 6.4% to $47.71, shares of Kinross Gold Corp. jumped 59 cents, or 5.5%, to $11.30 and shares of Ivanhoe Mines Ltd. picked up 14 cents, or 0.8%, to $17.67.
Shares of Atlantic Power Corp. fell 0.5% to $14.77, however, and Fortis Inc. shares declined 0.3% to $33.36. Just Energy Group Inc. shares shed 2.3% to $11.55, and shares of TransAlta Corp. fell 0.6% to $20.21.
Shares of Canada’s three largest banks — the largest cap companies on the Toronto exchange — also declined with Royal Bank of Canada down 1% to $53.23, Toronto-Dominion Bank falling 0.7% to $78.73, and Bank of Nova Scotia shedding 0.8% to $53.52.
In other corporate news, Crescent Point Energy Corp. plans to buy Wild Stream Exploration Inc. for about $770 million and spin off some of the acquired assets and liabilities into a separate company that will be led by Wild Stream’s current management. Wild Stream shares dipped 11 cents, or 1%, to $9.69 while Crescent Point dipped 47 cents or 1%, to $46.17.
Overseas, traders also took in a report that Britain’s economy shrank by 0.2% in the last quarter of 2011, a worse-than-expected result that raises recession fears.
The Office for National Statistics said that the economy, which had been expected to contract by only 0.1%, saw no growth in the key services sector and a slide in industrial activity.
Another quarter of contraction would put Britain officially in a recession.
Meanwhile, Germany's Ifo index, a widely watched gauge of business confidence, rose in January, indicating that the German economy may be gathering steam. The positive report follows an auction of 30-year German bonds that drew strong demand.
ON BAYSTREET
The TSX Venture Exchange advanced 27.76 points to 1,604.05, while the Nasdaq Canada index marched ahead 13.96 points to 396.94.
In all, nine 14 Toronto subgroups ended the day stronger, led by the aforementioned gold, up 5.2%, while materials climbed 4.4% and the metals and mining group triumphed 2.5%.
The five laggards were weighed by financials and utilities, each off 0.6%, and telecoms, down 0.3%.
ON WALLSTREET
In New York, stocks shaved early losses and turned higher Wednesday afternoon after the Federal Reserve said it plans to keep interest rates near historic lows through late 2014.
The Dow Jones Industrials gained 83.10 points to 12,758.80, levels the blue chips haven’t seen since last May.
The S&P 500 regained 11.41 points to 1,326.06, while the tech-rich Nasdaq Composite Index spiked 31.67 points to 2,818.31.
The Fed, which issued a statement at the end of a two-day policy meeting midday Wednesday, had previously said it would hold rates low through mid-2013.
The Fed's main tool for stimulating the economy, the federal funds rate is the interest rate banks charge one another for overnight loans. Keeping it at historic lows, as the Fed has done since 2008, is meant to stimulate spending by lowering interest rates on everything from mortgages to car and student loans.
Software company CA and Apple were the biggest gainers on the tech-heavy index, thanks to better-than-expected earnings.
In addition to keeping low rates, Fed chief Ben Bernanke also left the door wide open to additional stimulative policies, including a third round of bond purchases, a policy known as quantitative easing, or QE3.
During a press conference following the statement, Bernanke said "expanding the balance sheet certainly remains an option" for the Fed, and the central bank would consider it "very seriously if, in particular, progress towards full employment was continued or became more inadequate or if inflation remained exceptionally low."
Apple's earnings provided some positive momentum Wednesday, especially in the tech sector.
Late Tuesday, the iPhone and iPad maker reported a whopping quarterly profit of $13 billion U.S. -- the best quarter ever for a technology company.
The company said sales for the quarter hit $46.3 billion U.S., sending shares shooting up 6.5% Wednesday. The gains helped Apple surpass Exxon Mobil as the most valuable U.S. company.
Shares of Boeing turned higher, after the airplane maker reported a jump in fourth-quarter profit and revenue. Earlier shares were down, as the company also issued a disappointing full-year earnings guidance.
Delta reported fourth-quarter earnings that widely beat expectations, sending shares of the airline higher.
Shares of Ericsson tumbled after the Swedish telecom-equipment maker reported a 66% drop in fourth-quarter profit, driven by weak network sales.
Yahoo reported a much quieter quarter than Apple, posting earnings in line with analysts' expectations after the close Tuesday. Shares of the company slipped.
Shares of Nvidia slumped a day after the graphics chip maker cut its fourth-quarter sales outlook, citing a shortage of disk drives.
Advanced Micro Devices also reported earnings late Tuesday, posting revenue that missed expectations. But shares of the semiconductor company rose slightly.
Meanwhile, investors are also watching Greece's ongoing negotiations with representatives of private-sector creditors to reduce its debt burden. Officials are set to resume informal talks Thursday in Athens.
Greece is in desperate need of an agreement to receive additional bailout funds from the European Union and International Monetary Fund. Without these funds, the country may not be able to make a €14-billion debt payment that's due March 20.
On the economic beat, the Fed left its key interest rate unchanged at 0.25%, as analysts expected.
The Fed also released forward-looking forecasts for the federal funds rate for the first time ever on Wednesday, in addition to its outlook on the economy and labour market.
The central bank said it expects the unemployment rate to fall to between 8.2% and 8.5% in 2012, an improvement over what it had predicted back in November.
But the Fed is also predicting the economy will grow between 2.2% and 2.7% this year, slightly slower than it had previously thought.
For that reason, most of the policymakers at the Fed think the federal funds rate should remain near zero for the foreseeable future.
Elsewhere, pending home sales for the month of December dropped by 3.5%, after rising 7.3% in the prior month. Economists were expecting sales to fall 3%.
Treasury prices for the 10-year note jumped, lowering yields to 2.01% from Tuesday’s 2.06%. Treasury prices and yields move in opposite directions.
Oil for February delivery regained 87 cents to $99.82 U.S. a barrel.
Gold futures for February delivery gained $35.60, or 2.1%, to settle at $1,700.10 U.S. an ounce.
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