May 24th, 2024

TSX flat as oil falls, U.S. stock markets mixed after Fed holds interest rates steady

By Rosa Saba, The Canadian Press on May 1, 2024.

The S&P TSX composite index screen at the TMX Market Centre in Toronto is seen on Friday, Nov. 11, 2022. THE CANADIAN PRESS/Tijana Martin

TORONTO – Canada’s main stock index eked out a gain Wednesday even as energy stocks fell, while U.S. markets stumbled to a mixed close after the central bank held interest rates steady.

After a flat day of trading, markets suddenly shot up mid-afternoon, with major U.S. indexes gaining more than one per cent before reversing course and giving back the gains.

In New York, the Dow Jones industrial average closed up 87.37 points at 37,903.29.The S&P 500 index was down 17.30 points at 5,018.39, while the Nasdaq composite was down 52.34 points at 15,605.48.

The S&P/TSX composite index closed up 14.01 points at 21,728.55. The energy index was down 1.7 per cent as oil fell below US$80 per barrel on Wednesday.

The U.S. Federal Reserve held its interest rate steady Wednesday, a surprise to virtually no one after a series of strong-than-expected economic data reports forced traders to rethink expectations for cuts in 2024.

Chairman Jerome Powell said it will likely take “longer than previously expected” to get confident enough to cut rates. But he also said it’s unlikely the bank’s next move will be a hike, and markets began climbing soon afterward.

The Fed also offered markets a small bone, saying it would slow the pace of how much it’s shrinking its holdings of Treasurys, a move that could offer some stability to the bond market.

This small movement means the bank is slowing down the pace of its monetary tightening despite keeping interest rates steady, explained Jennifer Tozser, senior wealth adviser and portfolio manager with Tozser Wealth Management at National Bank.

“Slowing the pace is a movement away from hawkishness towards dovishness,” said Tozser.

Markets continue to hang on every word from the Fed as they seek any indication of when the bank could start cutting.

“The whole theme of this year is: interest rates are driving the bus, don’t forget it,” said Tozser.

Earnings continued to roll in, with shares in Amazon up more than two per cent after it reported stronger profit for the latest quarter than analysts expected, seeing benefits from demand for artificial intelligence.

Companies are poised to continue doing well after making earlier decisions in anticipation of a potential recession, rendering them leaner and more resilient, said Tozser.

It’s night and day compared with Canada, where recent GDP data surprised to the downside and the Bank of Canada is expected to start cutting its key rate in June. Canada is much more sensitive to interest rates, said Tozser, with a significant portion of mortgage holders set to renew soon at much higher rates.

“When the Bank of Canada has to come up with their decision … it could be vastly different.”

The Canadian dollar traded for 72.68 cents US compared with 72.75 cents US on Tuesday.

The June crude oil contract was down US$2.93 at US$79 per barrel and the June natural gas contract was down six cents at US$1.93 per 1,000 cubic feet.

The June gold contract was up US$8.10 at US$2,311 an ounce and the July copper contract was down one cent at US$4.55 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published May 1, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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