Fed’s stand pat move sends tsx lower
North American markets finished lower on Wednesday after the U.S. Federal Reserve opted not to take any moves to stimulate the struggling economy.
The S&P/TSX composite index was off 46.18 points to 11,618.53 and the TSX Venture Exchange gained 6.25 points to 1,189.33.
The Canadian dollar was down US0.23¢ to US99.48¢, as the greenback moved higher after the Fed announcement.
On Wall Street, the Dow Jones industrial average was down 32.55 points to 12,976.13 and the Nasdaq slid 19.31 points at 2,920.21. The S&P fell four points to 1,375.32.
The Fed’s statement to take no action noted that economic growth decelerated in the first half of the year. It also said employment growth has been slow in the U.S., while household spending has been rising at a slower pace than earlier in the year.
Policy-makers repeated their plan to hold short-term interest rates at record low levels until at least late 2014.
A note from CIBC economist Avery Shenfeld said the Fed’s statement repeats what the markets have already known, that the U.S. economy has had lacklustre growth.
The European Central Bank meets today, and expectations have been high. Last week, ECB president Mario Draghi said the bank “is ready to do what it takes to preserve the euro,” which set off speculation about sig- nificant moves, though that optimism has since lost much of its steam.
Gold stocks were lower on the TSX, off 1.5%, as August gold closed down $6.80 to US$1,603.70 an ounce on the New York Mercantile Exchange before the Fed announcement. September copper moved down 4.3¢ to US$3.38 a pound.
Mining and metals stocks dropped 1.4% with Ivanhoe Mines down 27¢ to $8.18.
The TSX energy sector gained 0.4% as the September crude contract on the Nymex closed 85¢ higher to US$88.91 a barrel.
The latest U.S. data showed that manufacturing shrank for the second straight month in July. The Institute for Supply Management, a trade group of purchasing managers, said its index of manufacturing activity ticked up to 49.8, from 49.7 in June, further evidence of an sluggish economy.
Payroll provider ADP said U.S. businesses added 163,000 jobs last month. The report comes two days before the U.S. government reports jobs numbers for July.
U.S. traders experienced unusually sharp moves shortly after the opening bell due to a technical glitch at a major processor affected about 150 stocks.
WestJet Airlines Ltd. says it will hike its quarterly dividend to shareholders by 33% after second-quarter profits hit a record $42.5 million or 31¢ per share. Revenue was up 12.2% to $809.3 million. Shares dropped 59¢ to $15.99.