Market gains made after volatile day

NORTH AMERICAN STOCK MARKETS REVERSE COURSE, AS LOONIE CONTINUES SLIDE

Canada’s main stock index managed to eke out a minor gain Tuesday as U.S. stocks closed sharply higher after another volatile day. The Toronto Stock Exchange’s S&P/TSX composite index was ahead 29.12 points or 0.19 per cent at 15,363.93, led by strong gains in the health-care and base metals sectors.

Trading was choppy in the early going Tuesday, after the TSX plunged in initial trading before paring its losses to 61.64 points or 0.4 per cent by midafternoon.

In New York, the Dow Jones industrial average finished the trading session up 567.02 points or 2.33 per cent at 24,912.77 — coincidentally, about the same amount it plunged at the opening of markets. The Dow had posted its biggest percentage decline since August 2011 on Monday.

Meanwhile, the S&P 500 — a broader market barometer that is comparable to the TSX — was up 46.20 points or 1.74 per cent at 2,695.14. The Nasdaq composite index was up 148.35 points or 2.13 per cent at 7,115.88.

“I’m not sure anything can surprise me at this point, however I do wish I had a degree in psychology ... because so much of this market is being led by the psychology of investing,” said Craig Jerusalim, portfolio manager of Canadian equities at CIBC Asset Management.

“At least today, earnings are quite robust and it’s all price that’s coming down.”

While many market observers say a correction was expected after a decadelong bull run, the trigger that sparked the sudden downturn is thought to be U.S. figures released last Friday that suggested long-anticipated wage growth has started to kick in, resulting in inflation and a greater potential for the U.S. Federal Reserve to raise interest rates.

An increase in interest rates pushes bond yields higher and makes such fixed-income investments more attractive and thus, bets on corporate earnings and dividends less attractive.

See related story, page B2.