Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, Oct. 28.Lucas Jackson/Reuters
Canadian stocks rose on Wednesday, rebounding from the biggest two-day decline since September, as oil producers climbed with prices jumping the most in eight weeks after U.S. inventories fell.
Equities in Canada pared gains after gold mining companies erased an advance following the Federal Reserve's latest interest rate decision. The Federal Open Market Committee sees a "moderate" pace of growth for the U.S. economy, leaving themselves the option to tighten policy at their next meeting in December.
The Standard & Poor's/TSX Composite Index rose 163.6 points, or 1.1 per cent, to 13,863.16 in Toronto. The benchmark Canadian equity gauge fell 1.8 per cent over the previous two days. The index is up 3.9 per cent in October, on pace for the biggest monthly increase in two years.
Goldcorp Inc. lost 3.3 per cent and Eldorado Gold Corp. tumbled 4.2 per cent as gold producers sank 2.1 per cent, reversing earlier gains of as much as 3.8 per cent. The S&P/TSX Gold Index pared its advance in October to 15 per cent, still on track for its best performance since January. The prospect of an interest- rate increase from the Fed dimmed during the month amid slowing global economic growth and mixed U.S. data. Gold becomes a less attractive investment when rates rise as the metal doesn't pay interest.
Canadian industrial stocks rallied 1.7 per cent. Canadian National Railway Co. climbed 2.9 per cent. Canadian National reported third-quarter earnings after the market close Tuesday, including revenue of $3.22-billion, ahead of estimates for $3.15-billion.
Bombardier Inc. soared 11 per cent after reports Quebec's government will provide financial assistance to the embattled maker of the CSeries jetliner. The Wall Street Journal separately reported Bombardier had recently approached the federal government for about $350-million in short-term financing, citing an unidentified person with knowledge of the matter.
Energy producers advanced 2.3 per cent. Crescent Point Energy Corp. added 4.1 per cent and Canadian Natural Resources Ltd. rose 3.6 per cent. WTI crude climbed the most in eight weeks, rebounding from a two-month low in New York after industry data showed declines in U.S. fuel inventories and crude stockpiles at the nation's biggest storage hub.
U.S. stocks soared, after erasing earlier gains following the Federal Reserve's policy meeting statement, as banks and energy companies led a rally.
Equities had advanced into the afternoon Fed statement, boosted by Apple Inc. following its better-than-expected results and by energy shares as oil surged the most in eight weeks. A signal that policy makers are still considering an interest-rate increase this year briefly undercut the gains before banks jumped on the prospects for stronger profits.
The Standard & Poor's 500 Index rose 1.2 per cent to 2,090.29 in New York, after earlier wiping out a 0.9-per-cent gain. The Nasdaq Composite Index increased 1.3 per cent, while the Russell 2000 Index rallied 2.9 per cent, its biggest gain this year.
"The impression the Fed left is that December is still on the table, they didn't close the door to that," said Russ Koesterich, a global chief investment strategist at BlackRock Inc., the world's largest money manager. "You're going to see some change of positions here, the main takeaway is the Fed is managing their optionality and if we get a few good economic data points, then December is possible."
The economy is still expanding at a "moderate" pace, Fed officials said as they left interest rates unchanged, and they will consider tightening policy at their next meeting in December without making a commitment to act this year. Even with a slower pace of recent job gains, labour market indicators show slack has diminished since early this year, the Federal Open Market Committee said.
The Fed removed a line from September's statement saying that global economic and financial developments "may restrain economic activity somewhat," saying only that the central bank is monitoring the international situation.
Policy makers last month opted to not raise rates after China's slowdown and its August currency devaluation added uncertainty to the global economic picture, sparking turmoil in financial markets. Markets have calmed this month, and a rate cut by China's central bank last week helped the S&P 500 erase a loss for the year.
The main U.S. equity gauge is poised for its best monthly gain in four years after rebounding almost 12 per cent from an August low. Energy, raw-material and industrial shares have helped propel the October rally, the same groups that weighed heavily during the benchmark's worst quarter since 2011 amid concern that weakness in China would spread.
Uneven data, including weaker-than-forecast new-home sales and consumer confidence reports this week, have held down expectations for higher borrowing costs this year. After the Fed statement, traders priced in a 54-per-cent chance of a January rate increase, up from about 43 per cent earlier Wednesday. The central bank has held the federal funds target rate in a range of zero to 0.25 per cent since December 2008.
Investors are also look to quarterly results. PayPal Holdings Inc., Marriott International Inc. and Amgen Inc. are among 44 S&P 500 companies posting earnings Wednesday, with analysts projecting profits for index members dropped 6.1 per cent in the third quarter. Of those that have released results this season, about 75 per cent have exceeded profit projections, while 55 per cent missed sales estimates
Oil climbed the most in eight weeks in New York as increasing U.S. refinery activity signalled the end of seasonal maintenance and higher crude demand.
West Texas Intermediate surged 6.3 per cent after the Energy Information Administration said refineries boosted operating rates. U.S. refiners typically slow during September and October to perform maintenance during a low fuel demand period. Gasoline and distillate fuel stockpiles fell last week, while consumption rose. Crude supplies climbed 3.38 million barrels.
"The refinery data might be a sign that the maintenance season is winding down," said Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kan., who helps manage $13.2-billion. "We're seeing strong demand for gasoline, diesel and jet fuel in the U.S. Even through crude supplies are high, there seems to be a little bit of a shift in sentiment."
Oil has slid since a rally above $50 earlier this month as U.S. crude inventories rose to more than 100 million barrels above the five-year seasonal average. Futures have slumped more than 45 per cent in the past year amid a global glut that the International Energy Agency estimates will remain until at least the middle of 2016.
WTI for December delivery increased $2.74 to settle at $45.94 a barrel on the New York Mercantile Exchange. It was the biggest gain since Aug. 31. The volume of all futures traded was 24 per cent above the 100-day average. The contract fell to $43.20 on Tuesday, the lowest close since Aug. 27.
Brent for December settlement rose $2.24, or 4.8 per cent, to $49.05 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $3.11 premium to WTI.
With files from Reuters