Newspaper article The Canadian Press

North American Markets Higher as U.S. Fed Meeting Gets Underway

Newspaper article The Canadian Press

North American Markets Higher as U.S. Fed Meeting Gets Underway

Article excerpt

Investors unnerved by Fed policy meeting

--

TORONTO - Stock markets in Toronto and New York closed higher Tuesday, with investors showing few worries about the strong possibility that the U.S. Federal Reserve will soon announce it's ready to start reducing its monetary stimulus.

The S&P/TSX composite index climbed 17.23 points to 12,834.11. The Canadian dollar was up 0.28 of a cent to 97.13 cents US.

Though hiring and economic growth in the United States remain soft, the Fed is widely expected to slow the pace of its US$85 billion a month in bond purchases as early as Wednesday at the end of its policy meeting.

Most economists predict the Fed's initial "tapering" move to be small, expecting a reduction of between $10 billion and $15 billion in the monthly purchases of Treasurys and mortgage bonds.

The program, dubbed quantitative easing, had been put in place to hold down long-term interest rates to stimulate the economy, which in turn has buoyed stock markets.

U.S. indexes were positive, as the Dow Jones industrials jumped 34.95 points to 15,529.73, while the Nasdaq was ahead 27.85 points to 3,745.70.

Both markets were boosted by a 0.39 per cent rise in shares of Microsoft Corp. (Nasdaq:MSFT) after the tech company's board approved a 22 per cent increase to its quarterly dividend along with a new $40-billion stock buyback program. Shares of the Redmond, Wash.,-based company closed 13 cents higher at US$32.93. The stock had traded as low as US$26.26 last December.

The broader market measure, the S&P 500, added 7.16 points to 1,704.76 -- just a few points shy of its record high.

North American markets had closed higher on Monday after economist Larry Summers, the frontrunner to head the central bank, bowed out.

Summers had long been perceived as an opponent to the Fed's aggressive bond-buying program. His withdrawal to succeed current Fed chairman Ben Bernanke had investors predicting that Fed vice-chair Janet Yellen, a supporter of the stimulus program, may be next in line for the top job.

"We're seeing the second round of reduced optimism from Summers' withdrawal but that's finding itself in a tug of war with what's on deck with the Fed speaking in terms of tapering," said Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.