Canadian stocks lost ground Wednesday after the U.S. Federal Reserve said it would extend its holdings of long-term Treasurys by $267 billion U.S.
The S&P/TSX Composite Index docked 29.02 points, to conclude Wednesday’s trading at 11,759.34
The Canadian dollar was down 0.16 to 98.09 cents U.S.
Even as the United States' largest trading partner, Canada’s reaction Wednesday remained muted, said one expert, because an extension of ”Operation Twist” doesn’t have nearly the impact as would further quantitative easing.
Oil and gas producer Candax Energy took a major hit, dropping 10% to 4.5 cents, and Eastern Platinum slipped 4.8% to 20 cents.
On the upside, NGEx Resources jumped 16.9% to $2.15, after initial results of a drilling project in Argentina were announced by the company.
Gold stocks wavered back and forth. Yamana Gold lost 2.6% to $16.33, while Eldorado Gold was unchanged at $13.22. Goldcorp dumped 1.4% to $39.62.
In individual company news, Alimentation Couche-Tard Inc. has succeeded in its protracted, $2.7-billion takeover bid for Norway’s Statoil Fuel & Retail ASA.
The company said almost 91% of Statoil Retail’s shares have now been tendered to the offer, which is above the 90% threshold at which Couche-Tard has said it would initiate a compulsory acquisition of the rest of the shares in the company.
Couche-Tard shares rose $2.42, or 5.6%, to $45.43.
In the energy field, Suncor dipped 53 cents, or 1.8%, to $29.63, while rival Imperial Oil fell 15 cents to $43.80.
ON BAYSTREET
The TSX Venture Exchange stepped back 9.91 points to 1,254.57. The Nasdaq Canada index slid 2.41 points to 377.29
In all, eight of the 14 Toronto subgroups finished the day negative. Metals and mining fell 2.5%, information technology tailed off 1.8%, and energy stocks weakened 1.3%.
The half-dozen gainers were led by telecoms, up 1.1%, consumer discretionaries, up 0.7%, and consumer staples, up 0.5%.
ON WALLSTREET
U.S. stocks fell Wednesday after the Federal Reserve extended one of its stimulus programs but stopped short of announcing a more aggressive bond buying policy.
The Dow Jones Industrials fell 12.94 points short of breakeven to end the session at 12,824.40
The S&P 500 dipped 3.75 points, at 1,354.23. The Nasdaq Composite Index eked its way into positive territory by 0.69 points to 2,930.45
Shares of Dow component Procter & Gamble continued to fall as the maker of consumer products cut its sales and earnings guidance for the current quarter and the full year.
Shares of Adobe Systems dropped after the software maker lowered its guidance after Tuesday's close, citing "a weaker demand forecast in Europe."
La-Z-Boy's stock was lower after the company beat expectations in releasing its quarterly earnings.
Jabil Circuit shares got a boost after the contract electronics manufacturer reported improved earnings in line with forecasts.
Burger King shares rallied after the fast-food chain debuted on the New York Stock Exchange for the third time.
The Fed announced plans to extend Operation Twist, the policy of swapping short-term Treasuries in the central bank's portfolio for bonds with a longer duration. The program, which was due to expire June 30, will continue through the end of 2012. The Fed expects to buy $267 billion U.S. worth of bonds.
The announcement comes as economic conditions in the United States have deteriorated, with slower than expected job creation weighing on consumer sentiment. In addition, the debt crisis in Europe continues to pose a significant threat to the global economy.
At a press conference Wednesday afternoon, Fed chairman Ben Bernanke said extending Operation Twist is a "substantive step" and that the central bank is "prepared to do what is necessary to provide support for the economy."
Bernanke said the Fed is monitoring the labour market and will act if hiring continues to slow. But he suggested that the Fed would not respond with another extension of Operation Twist.
The Fed lowered its forecast for 2012 economic growth to a range of 1.9% to 2.4%. In April, the growth outlook was between 2.4% and 2.9%.
At the same time, the Fed raised its forecast for the unemployment rate, predicting it will end the year between 8% and its current 8.2%.
The cloudy economic outlook had raised speculation that the Fed would take more aggressive steps to stimulate growth, such as intervening directly in the bond market. But Wednesday's move falls short of the full-blown quantitative easing that many investors have been calling for.
The Fed's Open Market Committee also held interest rates near zero, where they've been since December 2008, in an attempt to boost the economy. The FOMC has said it plans to keep rates "exceptionally low" through late 2014.
Greece has been a thorn in investors' sides for months, with fears about the country leaving the euro-zone and the ripple effect on other sovereign nations sending global financial markets on a roller coaster ride.
Economically speaking, oil prices slid after the U.S. Energy Information Administration's weekly crude inventories report showed an increase of 2.9 million barrels in the week ended June 16. Economists had expected a decline.
Elsewhere, the number of total mortgage applications filed in the U.S. last week slipped 1.3% from the prior week, the Mortgage Bankers Association said Wednesday.
The refinance index rose 1% from the previous week, according to the MBA's weekly survey, which covers more than three-quarters of all U.S. retail-residential-mortgage applications. On a seasonally adjusted basis, the purchasing index slipped 8.5% from one week earlier, MBA said.
The price on the benchmark 10-year U.S. Treasury lost ground, raising yields to 1.64% from Tuesday’s 1.62%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil slid $2.97 to $81.06 U.S.
Gold futures for August delivery dropped $7.40 to settle at $1,615.80 U.S. an ounce.
