Major stock market indexes surged + Pescod Speaks

Hope wins

RTGAM

Major stock market indexes surged soon after the U.S. Federal Reserve released its monetary policy statement on Wednesday afternoon - but handed back all of those gains, and more, in the final hour of trading, paring the day's gains.


Still, those gains were impressive, especially when you consider that the World Health Organization moved closer to declaring the swine flu outbreak a pandemic and the Commerce Department reported that the U.S. economy contracted by 6.1 per cent in the first quarter, which was a far worse decline than economists had been expecting.


Despite the bad news, and the late-day stock market decline, the Dow Jones industrial average closed at 8185.73, up 168.78 points, or 2.1 per cent, as investors continued to bet that the economy had bottomed out and was showing signs of improvement. The broader S&P 500 closed at 873.56, up 18.4 points, or 2.2 per cent.


Both indexes had been up as much as 3 per cent soon after the Fed released its statement, in which it said that the "economy has continued to contract, though the pace of contraction appears to be somewhat slower" - a sign to many investors that the worst may be over.


Financials were strong, with Citigroup Inc. up 8 per cent and Bank of America Corp. up 6.5 per cent. In other moves, Walt Disney Co. rose 7.7 per cent and Boeing Co. rose 4.4 per cent.


In Canada, the S&P/TSX composite index closed at 9416.31, up 68.28 points, or 0.7 per cent. There, a number of energy stocks rose after the price of crude oil moved to $50.97 (U.S.), up $1.05. Talisman Energy Inc. rose 7 per cent after it reported a lower profit in the first quarter. Canadian Oil Sands Trust rose 5 per cent.


Among financials, Manulife Financial Corp. rose 2.1 per cent and Bank of Nova Scotia rose 2 per cent, but Bank of Montreal fell 1 per cent.


TMX Group Inc., which operates the Toronto Stock Exchange, fell 10.2 per cent after investors apparently weren't pleased when it reported earnings of 58 cents (Canadian) a share, up from 49 cents a share last year. Research In Motion Ltd. was also a notable laggard, falling 3.9 per cent.

Copyright 2001 The Globe and Mail