North American stock market indexes looked as though they were going to end on a high note on Wednesday. Then – oops! – investors were treated to another massive selloff in the closing minutes of trading.
The Dow Jones industrial average closed at 8990.96, down 74.16 points, or 0.8 per cent – after shedding 370 points in the final 10 minutes. The volatility is even more striking when you consider that the Dow rose nearly 890 points on Tuesday. The broader S&P 500 took a similar swan dive, closing at 930.09, down 10.42 points, or 1.1 per cent.
In Canada, the S&P/TSX composite index ended the day with a big gain, but nonetheless sputtered at the end. The index closed at 9501.56, up 349.93 points, or 3.8 per cent. But before you celebrate the gains, which followed a 614-point surge on Tuesday, keep in mind that the index fell about 130 points at the end of the day.
The dramatic moves came on a day when the U.S. Federal Reserve cut its key interest rate by a half of a percentage point, to 1 per cent, in a widely anticipated move by economists.
Soon after the release of the decision, the Dow gave up modest earlier gains – possibly due to the Fed's language in its statement, which noted that the global economy is in trouble – and then embarked upon a tear that left few stocks underwater (hey, more cuts are on the way!). The late-day surge gave way at the end, particularly for financial stocks.
In the end, Intel Corp. fell 5.8 per cent, JPMorgan Chase & Co. fell 5 per cent, Citigroup Inc. fell 3.7 per cent, Johnson & Johnson fell 4.1 per cent and General Electric Co. fell 1.5 per cent.
In Canada, commodity producers were the big winners after the price of crude oil leapt to $67.50 (U.S.) a barrel, up $5.18, and gold rose to $754 an ounce, up $13.50.
EnCana Corp. rose 6.7 per cent and Suncor Energy Inc. rose 10.3 per cent. Among materials stocks, Barrick Gold Corp. rose 10.2 per cent and Potash Corp. of Saskatchewan Inc. rose 9 per cent. Financials, however, were mixed. Royal Bank of Canada rose 1 per cent and Bank of Montreal fell 1.4 per cent.
