Federal Reserve officials stuck to their easy-money policy of buying U.S. Treasury bonds and keeping short-term interest rates near zero amid new signs that the recovery is gathering some steam.
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The Toronto stock market was little changed in early trading Tuesday as investors look to an afternoon announcement from the U.S. Federal Reserve on interest rates and economic conditions.
The S&P/TSX composite index was off 7.09 points to 13,288.76 while the TSX Venture Exchange gained 1.56 points to 2,132.32.
The Canadian dollar shed early gains against the U.S. dollar, down 0.24 of a cent to 99 cents US.
Analysts aren’t expecting much from the actual Fed meeting, with rates and the quantitative easing program to expand the money supply left unchanged.
But the accompanying statement will be closely assessed for any change in tone.
Most analysts think that the Fed will likely acknowledge the recent improving tone in the U.S. data and that the immediate outlook looks better since U.S. President Barack Obama agreed to compromise with Republicans to extend tax cuts for all Americans.
The telecom sector was higher after Telus Corp. (TSX: T) projected revenue growth of one to four per cent across its operations in 2011, driven primarily by revenue in its wireless division. The telecommunications company expects revenue between $9.7 billion and $9.95 billion in its outlook for next year. Earnings per share are expected to be between $3.10 to $3.30, an increase of somewhere between one and six per cent and Telus shares were ahead 38 cents to $46.79.
The tech sector also provided some lift with Research In Motion Ltd. (TSX: RIM) ahead 57 cents to $61.82.
Oil prices slipped as traders look to weekly U.S. crude inventory figures for signs demand could be improving.
Crude inventories likely fell three million barrels last week, according to analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. The American Petroleum Institute is scheduled to announce its inventory numbers later Tuesday while the Energy Department’s Energy Information Administration reports its weekly supply data Wednesday.
The energy sector was flat with January crude contract on the Nymex off 46 cents to US$88.15 a barrel. Imperial Oil (TSX: IMO) rose 15 cents to $38.37.
The base metals sector was slightly higher as the March copper contract on the Nymex was off a penny at US$4.19 a pound. Equinox Minerals (TSX: EQN) lost nine cents to $6.06 while Quadra FNX Mining (TSX: QUX) gained 24 cents to $16.28.
The February gold contract on the New York Mercantile Exchange headed $2.40 lower to US$1,395.60 an ounce. Kinross Gold Corp. (TSX: K) rose 11 cents to $18.57.
The U.S. dollar had earlier been under pressure following a warning from credit rating agency Moody’s Investor Services that the U.S. could have a negative outlook put on its triple-A rating if it doesn’t get a handle on its borrowing over the coming two years.
But the greenback strengthened after data was released showing that retail sales rose for a fifth straight month in November, as the biggest jump in department store sales in two years gave the holiday shopping season a strong start. Retail sales increased 0.8 per cent last month, the Commerce Department said Tuesday.
Auto sales retreated a bit in November. But excluding autos, sales rose 1.2 per cent — the best showing since last March.
But electronics chain Best Buy Co. took some of the shine off the retail data. The company said third-quarter net income fell more than expected as it lost sales of TVs and laptops to competitors. It also cut its full-year outlook Tuesday.
Revenue in stores open at least 14 months fell five per cent in the U.S.
Net income fell four per cent to US$217 million while revenue fell one per cent to US$11.89 billion and its shares tumbled $5.88 or 14 per cent to US$35.82.
New York markets were also soft with the Dow Jones industrial average 24.45 points higher to 11,453.01.
The Nasdaq composite index rose 3.92 points to 2,628.83 while the S&P 500 index climbed 1.79 points to 1,242.25.
In other corporate news, Agrium Inc. (TSX: AGU) says it’s talking to “a number of interested parties” about selling the commodity management business of Australian grain producer AWB Ltd., which it recently acquired for $1.2 billion. Its shares declined 72 cents to $82.22.
Earlier in Asia, Hong Kong’s Hang Seng climbed 0.5 per cent and China’s benchmark Shanghai Composite Index gained 0.1 per cent.
Japan’s Nikkei 225 stock average added 0.2 per cent while Australia’s S&P/ASX 200 advanced 0.2 per cent.
London’s FTSE 100 index added 0.3 per cent, Frankfurt’s DAX dipped 0.13 per cent while the Paris CAC 40 was ahead 0.01 per cent.