TSX advances as Fed Takes dovish Stance

TORONTO• The Toronto stock market was higher Wednesday as minutes from the Federal Reserve’s latest interest rate meeting were taken to indicate that the U. S. central bank will be more accommodative than thought in keeping short- term rates low.

The S& P/ TSX composite index was up 63.13 points to 14,435.58.

Indexes were also boosted by strong earnings reports from the retail and resource sectors.

The Canadian dollar climbed 0.42 of a cent to US91.98¢.

New York indexes ran ahead as the minutes showed that Fed officials had a secret video conference call in early March where they reached a consensus that the 6.5% unemployment rate threshold for the first rate hike had become outdated. On the conference call, the central bankers were clearly worried that changing the forward guidance would impact markets.

In the end, the Fed settled on an openended approach — that even after employment and inflation are nearly back to normal, short- term rates may need to stay unusually low for a while because the economy isn’t fully healthy.

The Dow Jones industrials jumped 181.04 points to 16,437.18, the Nasdaq rose 70.91 points to 4,183.9 and the S& P 500 index gained 20.22 points to 1,872.18.

Traders are braced for a slew of firstquarter earnings reports over the next few weeks.

“We’re looking for pretty modest revenue growth,” said Wes Mills, chief investment officer, Scotia Private Client Group.

“I think it’s going to be very stockspecific. Valuations don’t give you much room to disappoint too far because we’re fairly or fully valued. But the general tone of things is that, on the year, global growth is improving. Things still look pretty good,” Mills said.

The reporting season got off to an auspicious start Tuesday as Alcoa Inc. said that it lost US$ 178- million in the first quarter as the price it was paid for aluminum dropped 8% from a year ago. However, earnings excluding writedowns to reduce smelting and milling capacity were 9¢ per share, 4¢ better than expectations and Alcoa shares rose 3.75% in New York.

And on Wednesday, Montreal- based discount chain Dollarama announced a hike in its quarterly dividend to 16¢ from 14¢. The retailer also posted a quarterly net profit of $ 83- million and diluted earnings per share of $ 1.17. That compares with $ 77.1- million in the same quarter last year on diluted EPS of $ 1.04. Sales for the quarter were $ 582.2- million compared with $ 561.8- million year over year. Its shares ran ahead $ 7.19 or 8.38% to $ 92.97 after earlier hitting an all time high of $ 94.25.

Tech stocks led TSX advancers, up 2.19%, with Constellation Software ahead $ 11.78 to $ 276.99.

The base metals component turned higher, up 0.89% while May copper was down one cent to US$ 3.04 a pound.

May crude on the New York Mercantile Exchange rose $ 1.04 to US$ 103.60 a barrel and the energy sector gained 0.57%.

The gold sector was flat as June bullion fell $ 3.20 to US$ 1,305.50 an ounce.