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Traders work on the floor of the New York Stock Exchange, September 12, 2012. (BRENDAN MCDERMID/REUTERS)
Traders work on the floor of the New York Stock Exchange, September 12, 2012. (BRENDAN MCDERMID/REUTERS)

The close: Cyclical stocks drive Dow, TSX higher Add to ...

Stocks rose on Friday, sending U.S. indexes to fresh multi-year highs after momentum from the Federal Reserve’s stimulus efforts Thursday outweighed disappointing U.S. economic news.

The Dow Jones industrial average closed at 13,593.37, up 53.51 points or 0.4 per cent. The broader S&P 500 closed at 1465.77, up 5.78 points or 0.4 per cent – a new high since late 2007. In Canada, the S&P/TSX composite index closed at 12,499.47, up 139.31 points or 1.1 per cent.

The moves follow strong gains on Thursday, when the Fed announced a bold round of stimulus efforts in an attempt to boost U.S. economic activity and employment.

In making its decision, the Fed was reacting to signs of sluggishness in the economic recovery, and economic reports on Friday confirmed that the economy is struggling.

Industrial production in August fell 1.2 per cent – far worse than what economists had been expecting and providing a sign that the U.S. industrial sector is feeling the effects of weaker global demand.

Retail sales in August rose 0.9 per cent, topping expectations. However, the details were weak: Strip out autos and gasoline sales and retail sales rose just 0.1 per cent, lagging expectations considerably.

The one high note was the University of Michigan’s consumer confidence index, which rose to 79.2 in September, up from 74.3 in August and touching a four-month high.

Within major indexes, there was a strong preference for economically sensitive areas of the market – especially commodity producers – at the expense of defensive areas.

Among big U.S. movers, Caterpillar Inc. rose 2.8 per cent, United Technologies rose 2.4 per cent and Alcoa Inc. rose 2.2 per cent. Among some of the key defensive stocks, AT&T Inc. fell 2.3 per cent and Wal-Mart Stores Inc. fell 0.9 per cent.

In Canada, commodity producers were the biggest winners after key commodity prices nudged higher. Gold rose to $1,772.70 (U.S.) an ounce, up 60 cents. Crude oil rose to $99 a barrel, up 69 cents, reaching its highest level in four months. Barrick Gold Corp. rose 2.2 per cent and Suncor Energy Inc. rose 3.4 per cent.

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