Traders work the crude oil options pit at the New York Mercantile Exchange Tuesday, June 19, 2012 in New York. The price of oil edged higher above $83 a barrel Tuesday as traders closely watched talks between Iran and six world powers over the Middle Eastern country's nuclear program and developments in the eurozone debt crisis.Mary Altaffer/The Associated Press
North American stocks continued to move higher in midday trading on Tuesday, a day ahead of a much-anticipated monetary policy announcement from the U.S. Federal Reserve and signs that countries were moving to staunch the effects of the European debt crisis.
At noon, the Dow Jones industrial average was up 123 points or 1 per cent, to 12,865. The broader S&P 500 was up 14 points or 1.1 per cent, to 1359. In Canada, the S&P/TSX composite index was up 130 points or 1.1 per cent, to 11,732.
The moves follow gains overseas. In Europe, Germany's DAX index close 1.8 per cent higher while the U.K.'s FTSE 100 rose 1.7 per cent.
There, the debt crisis remains in full-bloom. An auction of Spanish government short-term bills was met with wide demand from investors, but surging yields meant that the government's borrowing costs have ballooned. At least the yields on longer-term bonds subsided. The yield on Spain's 10-year bonds fell below 7 per cent after hitting euro-era highs on Monday.
Meanwhile, emerging economies have pledged more money to Europe's bailout fund, bringing the total to $456-billion (U.S.). China alone is set to contribute $43-billion to the fund, which is designed to limit the spread of the crisis.
The Federal Reserve has begun its two-day meeting on monetary policy, culminating on Wednesday with the release of a policy statement and potentially some news on how it intends to deal with the recent batch of weak economic data. Some observers believe the Fed could announce some form of stimulus, most likely entailing an extension of the so-called Operation Twist, in which the Fed holds down borrowing costs by selling short-term bonds and buying longer-term bonds.
Cyclical areas of the market were by far the biggest movers within the S&P 500 in midday action. Financials led the gains, rising 1.9 per cent. Materials rose 1.8 per cent, industrials rose 1.5 per cent and energy stocks rose 1.3 per cent. Defensive stocks lagged.
With Canada's benchmark index, energy stocks rose 1.4 per cent, industrials rose 1.3 per cent and financials rose 1.2 per cent. Materials were among the biggest laggards, due to weak gold producers.
David Berman