TSX, New York markets battle back

The Toronto Stock Exchange was solidly higher Wednesday while indexes in New York soared as buyers flocked back to end a six-day slide, the longest on Wall Street in more than three years.

The turnaround at least temporarily ended the bleeding that has driven investors from the market and wiped out trillions of dollars in asset values, but there was no guarantee it would put an end to the recent volatility.

Still, there is no reason for most investors to be overly concerned, said Craig Jerusalim, a portfolio manager with CIBC Asset Management, who added that much of the volatility has to do with investor psychology.

“When greed is taking hold and the market is high, that is when investors want to be buying and when the market is low and fear sets in, that’s when they want to be selling,” Jerusalim said. “So investors essentially want to do the exact wrong thing at the wrong time.”

He said people should stay invested in companies with strong balance sheets and sustainable business models since statistics show that, in most years, being out of the market on just the 10 best trading days can wipe out all or most of the year’s gains.

But for a day, at least, there was relief on the markets as the Dow Jones industrial average shot up 619.07 points, or almost 4 per cent, to 16,285.51.

The gain more than matched its worst one-day drop since the recent sell-off began — 588.4 points on Monday — but leaving the index still down more than 700 points over the period.

The S&P 500 rose 72.90 points to 1,940.51 and the Nasdaq jumped 191.05 points to 4,697.54 after also having suffered heavy losses prompted by concerns over the health of China’s economy and a devaluation of its currency, the yuan.

In Toronto, the S&P/TSX composite also soared, up 230.66 points, or 1.75 per cent, to 13,381.591.

On commodity markets, the benchmark October oil contract settled down 71 cents at $38.60 (U.S.) a barrel, while September natural gas lost a penny to $2.69 per thousand cubic feet. September copper fell seven cents to $2.25 a pound while August gold lost $13.60 to settle at $1,124.60 an ounce.

The Canadian dollar, which hit 11year lows on Tuesday, was up 0.13 of a cent (U.S.) at 75.06 cents.

Stock markets around the world have been in flux for more than a week amid deep plunges on China’s main market and a decision by its central bank to devaluate the yuan in a move to stimulate its slowing economy.

Jerusalim said changes in China’s economy are bound to have ripple effects globally.

But he added they were not going to derail “the most stable economy in the world, which is the United States.”