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Traders work on the floor of the New York Stock Exchange, July 30, 2012. (BRENDAN MCDERMID/REUTERS)
Traders work on the floor of the New York Stock Exchange, July 30, 2012. (BRENDAN MCDERMID/REUTERS)

The close: Stimulus hopes drive Dow, TSX higher Add to ...

North American stocks turned in decent gains on Friday, after a speech by Federal Reserve chairman Ben Bernanke in Jackson Hole, WY, was widely accepted as a prelude to another round of economic stimulus.

At noon, the Dow Jones industrial average closed at 13,090.84, up 90.13 points or 0.7 per cent. The broader S&P 500 closed at 1406.58, up 7.10 points or 0.5 per cent. In Canada, the S&P/TSX composite index closed at 11,949.26, up 62.61 points or 0.5 per cent.

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While Mr. Bernanke made no clear commitment to another round of economic stimulus – something markets had been hoping for – he appeared to lay the groundwork for such action. In his prepared remarks, he said the U.S. labour market was a grave concern and that previous Fed policy tools had been effective in boosting economic growth.

Major indexes had pared their gains immediately after the prepared remarks were released, but then bounced back.

Commodity producers were among the biggest winners after crude oil and gold jumped. Gold – widely seen as a hedge against inflation should Fed monetary tinkering come with unintended consequences – rose to $1,687.60 (U.S.) an ounce, up $30.50, marking its highest level since March.

Crude oil rose to $96.47 a barrel, up $1.85.

Among Canadian commodity producers, Barrick Gold Corp. rose 3.3 per cent and Suncor Energy Inc. rose 0.6 per cent.

Laurentian Bank of Canada rose 2 per cent after reporting quarterly earnings of $30-million or $1.06 (Canadian) a share, down from $1.08 a share last year.

Facebook Inc. fell to a new low of $18.06, down 5.4 per cent, after a number analysts cut their price targets on the stock and warned that the end of lockup periods for early investors will continue to put pressure on the shares. BMO Nesbitt Burns cut its target to $15, down $10. And Bank of America cut its target to $23, down $12.

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