North American stocks rose on Tuesday, a day ahead of a much-anticipated monetary policy announcement from the U.S. Federal Reserve.
At noon, the Dow Jones industrial average closed at 12,837.33, up 95.51 points, or 0.8 per cent. The broader S&P 500 closed at 1357.98, up 13.20 points, or 1 per cent – taking it to its highest level since early May and up 6.3 per cent from its recent low in June. In Canada, the S&P/TSX composite index closed at 11,788.36, up 187.23 points, or 1.6 per cent.
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.
However, the backdrop in Europe remains troubling. 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 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.
Microsoft Corp. rose 2.9 per cent after it unveiled a tablet on Monday to compete against Apple Inc.’s iPad. Apple shares rose 0.3 per cent.
Oracle Corp. rose 3.1 per cent after it reported a 7.5 per cent gain in its fourth quarter earnings, released ahead of schedule. FedEx Corp. rose 2.8 per cent after it reported earnings of $1.73 (U.S.) a share, topping expectations.
Among Canadian stocks, Suncor Energy Inc. rose 3.1 per cent after the price of crude oil rose to $84.35 a barrel, up 75 cents. However, gold producers generally lagged after gold retreated to $1,623.20 an ounce, down $3.80. Barrick Gold Corp. fell 0.4 per cent.