North American stocks held onto strong gains in midday trading on Friday, following an earlier speech by Federal Reserve chairman Ben Bernanke in Jackson Hole.
At noon, the Dow Jones industrial average was up 123 points or 1 per cent, to 13,124. The broader S&P 500 was up 11 points or 0.8 per cent, to 1,410. In Canada, the S&P/TSX composite index was up 75 points or 0.6 per cent, to 11,961.
While Mr. Bernanke made no clear commitment to another round of economic stimulus – something markets had been hoping for – he appeared to lay the groundwork for such action. In his prepared remarks, he said the U.S. labour market was a grave concern and that previous Fed policy tools had been effective in boosting economic growth.
Major indexes had pared their gains after the prepared remarks were released, but then bounced back.
Commodity producers were the biggest winners. Within the S&P 500, energy stocks rose 1.3 per cent and materials rose 1.2 per cent – although all 10 subindexes were higher, suggesting a broad rally.
Within Canada’s benchmark index, materials surged 2.2 per cent, driven largely by a jump in the price of gold. Gold rose to $1,690 (U.S.) an ounce, up $25 to its highest level since March – indicating that the gold market, at least, believes the Fed is warming up another round of quantitative easing, or bond buying using printed money.
Canadian energy stocks rose 0.9 per cent, following crude oil. In New York, oil rose to $96.24 a barrel, up $1.62.
In Europe, major indexes finished the week mixed. The U.K.’s FTSE 100 fell 0.2 per cent but Germany’s DAX index rose 1.1 per cent.