TSX, TraderS ignore weak U.S. reporT

The Toronto stock market closed slightly higher Friday as traders shrugged off a weak U. S. manufacturing report and hopes rose for another dose of economic stimulus from the U. S. Federal Reserve.

The S& P/ TSX composite index gained 19.72 points to 12,082.23, while the TSX Venture Exchange added 3.80 points to 1,251.88. The Canadian dollar was ahead US0.20¢ at US$ 1.0085.

U. S. markets also advanced after the U. S. Commerce Department said that orders for durable goods rose a seasonally adjusted 4.2% in July. But there had been initial dismay as the data showed that excluding aircraft and other transportation goods, orders dropped 0.4%. Economists had expected a 2.5% rise.

“Is it really realistic to exclude the whole aircraft and auto industry from the numbers?” asked Robert Gorman, chief portfolio strategist at TD Waterhouse. “No.”

“The auto sector numbers continue to be quite strong, they’re a big part of the economy and I wouldn’t get too bent out of shape about the ex- transport number being below expectations. I’m not sure this is really going to make a huge difference at the end of the day and the market reaction reflects that.”

Sentiment improved on markets late in the morning after the Wall Street Journal reported that Federal Reserve Chairman Ben Bernanke made it clear in a letter to a House Republican lawmaker that he thinks the Fed can do more to bolster the economic recovery and help reduce unemployment.

Bernanke says in the letter to Darrell Issa that with interest rates at record lows, the Fed has had to deploy other means to strengthen the economy, such as buying bonds.

The Dow Jones industrial average jumped 100.51 points to 13,157.97.

The Nasdaq composite index was 16.39 points higher to 3,069.79, while the S& P 500 index rose 9.05 points to 1,411.13.

The Fed has been in focus after minutes released Wednesday from the Federal Reserve’s last policy meeting showed bankers favoured more stimulus.

But doubts about Fed intentions grew Thursday after St. Louis Federal Reserve Bank president James Bullard said the minutes from the Aug. 1 meeting were stale because the economy had picked up since then. Adding to uncertainty was Chicago Fed president Charles Evans, who said Thursday the Fed should take action to bolster the economy.

The durable goods report added to the debate over whether the U. S. economic recovery has weakened to a point where the Federal Reserve will launch another round of stimulus measures.