Markets in Toronto and Wall Street were cautious Tuesday, as the U.S. Federal Reserve heads into a two-day meeting that will likely end with the central bank announcing that it’s ready to start reducing its monetary stimulus.
The S&P/TSX composite index climbed 7.89 points to 12,824.77. The Canadian dollar was slightly higher, up 0.12 of a cent to 96.97 cents US.
Though hiring and economic growth in the United States remain soft, the Fed is widely expected to slow the pace of its $85-billion-a-month in bond purchases. This highly anticipated move could happen as early as Wednesday.
Most economists expect the Fed’s initial “tapering” move to be small – a reduction of between $10-billion to $15-billion of monthly purchases in Treasurys and mortgage bonds. The program, dubbed quantitative easing, was put in place to keep long-term loan rates low to get people to borrow and spend and invest in the stock market.
U.S. indexes were slightly higher at the open. The Dow Jones industrials surged 28.99 points to 15,523.77, the Nasdaq was ahead 8.44 points to 3,726.29 and the S&P 500 added 2.48 points to 1,700.08.
There wasn’t much excitement on the commodity markets either. Oil prices declined as the October crude contract dipped 82 cents to $105.77 a barrel. December bullion fell $5.20 to $1,312.60 an ounce, while December copper was ahead at $3.23 a pound.