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At midday: Dow, TSX down on Fed second thoughts

North American stocks were down in midday trading on Thursday, as investors reweigh the possibility of the Federal Reserve providing economic stimulus in the months ahead.

At noon, the Dow Jones industrial average was down 79 points or 0.6 per cent, to 13,094. The broader S&P 500 was down 6 points or 0.5 per cent, to 1407. In Canada, the S&P/TSX composite index was down 24 points or 0.2 per cent, to 12,095.

The moves follow comments from Fed official James Bullard, who said in a television interview that the minutes from the last monetary policy meeting were stale, and that the probability of more stimulus from the Fed is probably lower than the market believes.

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His comments follow the release of minutes from the Fed's last monetary policy meeting, at the start of August. They suggested that the Fed is in fact closer to providing economic stimulus – and that quantitative easing was being considered – but only if the economy continued to disappoint. Since then, a number of economic indicators have improved, including better-than-expected job gains in July.

The economic news on Thursday was mixed. The U.S. Labor Department reported that initial jobless gains for the period ended last week rose to 372,000, up 4,000 and marking the second consecutive week of gains.

But new home sales rose 3.6 per cent in July, topping expectations amid a slight decline in unsold inventory – providing yet another reason to believe that the housing market is slowly recovering.

Boeing Co. fell 2.5 per cent after Australia's Qantas Airlines cancelled orders for 35 Boeing aircraft.

Hewlett-Packard Co. fell 6.6 per cent after it updated its earnings projections for the full year, with earnings now expected to be at the low-end of an earlier estimate.

Within the S&P 500, all 10 subindexes were down. Materials were the biggest laggards, falling 1.3 per cent, while technology stocks and utilities fell 0.9 per cent each.

Within Canada's benchmark index, energy stocks and industrials fell 0.7 per cent each, while financials fell 0.3 per cent. Materials rose 0.4 per cent, lifted by a rise in the price of gold: It rose to $1,672 (U.S.) an ounce, up $17.

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About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More

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