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TD Bank and CIBC reported increased year-over-year earnings Thursday.Nathan Denette/The Canadian Press

North American stock markets faltered on Thursday as investors held their breath for a U.S. Federal Reserve meeting Friday.

Greg Taylor, chief investment officer of Purpose Investments, said markets are waiting to see whether Federal Reserve chair Jerome Powell changes his tune on stimulus and the country’s path out of the pandemic at the annual meeting in Jackson Hole, Wyo.

“Today really feels like a general calm before the storm,” said Taylor.

“People are taking some money off the table because we’ve had a good 10-day stretch and they just want to see what the Fed does tomorrow and what the response is from there.”

He said unemployment numbers out of the U.S. that edged up but remained near a pandemic-low were a positive sign for investors that the economy was recovering, but not at too fast of a pace.

“That’s good news because the biggest fear the markets have right now is that the economy is going to rebound too fast and the Fed is going to have to start tapering back,” said Taylor.

“As long as the economic stats stay not too hot and not too cold, I think that’s good for the market.”

In New York, the Dow Jones industrial average was down 192.38 points at 35,213.12. The S&P 500 index was down 26.27 points at 4,469.92, while the Nasdaq composite was down 96.05 points at 14,945.81.

The S&P/TSX composite index was down 83.17 points at 20,504.15.

In Canada, quarterly results for the major banks continued to be a point of focus this week.

Taylor said the banks largely met expectations, with TD Bank and CIBC reporting increased year-over-year earnings Thursday. He pointed out that TD Bank’s higher profits were a result of cost-cutting rather than higher revenues.

“There’s been no big real surprise out of the banks,” said Taylor.

“But there’s still really not that much revenue growth … once we get into the fall we should start to see some dividend bumps and buybacks coming from the banks and I think that’s pretty positive for the Canadian market.”

TD Bank’s stock fell by 2.39 per cent to $83.70, while CIBC’s stock fell 2.09 per cent to $148.19.

The TSX’s energy index was able to weather a slight drop in crude oil prices, staying relatively flat with a 0.28 per cent rise to 120.02 points.

The October crude oil contract was down 94 cents at US$67.42 per barrel, while the October natural gas contract jumped up by 29 cents at US$4.21 per mmBTU.

Taylor said other commodities like gold and copper were also showing some strength after some losses that could be attributed to a strengthening U.S. dollar.

The December gold contract was up US$4.20 at US$1,799.60 an ounce and the December copper contract was down two cents at US$4.26 a pound.

The loonie was also down as a result of the strength in the greenback, trading for 79.05 cents US compared with 79.25 cents US on Wednesday.

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