North American stocks on Wednesday looked set to end a weak stretch, sending major U.S. indexes toward new highs in midday trading.
The S&P 500 was up 8 points or 0.5 per cent, to 1,556 – marking its first gain over the past four sessions. The blue-chip Dow Jones industrial average was up 55 points or 0.4 per cent, to 14,511.
In Canada, the S&P/TSX composite index was up 36 points or 0.3 per cent, to 12,810. It was aided by another rally in Research In Motion Ltd. stock, which was trading near its highs at midday, up 7.7 per cent at $16.61. Morgan Stanley upgraded RIM two notches earlier today, to “overweight” from “underweight” and raised its price target to $22 from $10 (U.S.)
The moves come ahead of the latest monetary policy statement from the Federal Reserve, due to be released later in the afternoon. While rate increases are out of the question, investors and economists will be looking for any shift in the central bank’s economic outlook and commitment to its open-ended asset-buying program.
The stock market gains suggest that investors are no longer worried about the threat posed to the euro zone by Cyprus. The country rejected on Tuesday a bailout plan that would have tapped bank deposits. It has instead appealed to Russia for financial assistance, but European leaders remain committed to finding a solution to the crisis.
Bond yields of other less-than-stable European nations – including Spain and Italy – declined, following a jump on Tuesday. Gold, seen as a haven, also declined, to $1,607 (U.S.) an ounce, down $5.
However, the U.K. slashed its economic growth projection in half for this year, to 0.6 per cent growth from a previous forecast of 1.2 per cent.
Among European indexes, the U.K.’s FTSE 100 was down 0.2 per cent in late afternoon trading and Germany’s DAX index was up 0.5 per cent.
Within the S&P 500, the gains were broad. Consumer stocks showed the biggest gains, with discretionary stocks and staples up 0.8 per cent each. Health-care stocks rose 0.7 per cent and financials rose 0.6 per cent.
FedEx Corp. slumped 6 per cent after it reported that its quarterly earnings fell 31 per cent over last year, to $1.13 a share. It also forecast weaker-than-expected earnings for the current quarter. The company is seen by some investors as a bellwether for the global economy.
In Canada, telecom stocks rose 0.7 per cent, consumer discretionary stocks rose 0.6 per cent and industrials rose 0.5 per cent. Commodity producers didn’t move much: energy stocks rose 0.2 per cent and materials rose 0.1 per cent. Financials were almost flat.