No bad news here
Investors weren't in any mood Wednesdy to hear about the negative forecasts of the "experts," but were more than happy to buy stocks in anticipation of big stimulus cheques and bailout plans, sending North American indexes sharply higher.
The International Monetary Fund released its latest forecast for global economic growth, shredding earlier projections of a modest downturn and incorporating a new vision of real trouble ahead. The U.S. economy is now projected to contract by 1.6 per cent in 2009, as against an earlier forecast of a decline of 0.7 per cent. For Canada, the new forecast is for a contraction of 1.2 per cent, down from 0.3 per cent growth. The global economy is expected to slip deeper into recession.
Meanwhile, the U.S. Federal Reserve ramped up the grim talk in its latest monetary policy statement, released in the afternoon.
"Information received since the committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending," the Fed said. "Furthermore, global demand appears to be slowing significantly."
You wouldn't know it from stock market moves, though, which instead reflected hopes for a $900-billion (U.S.) stimulus package from the U.S. administration and the creation of a "bad bank" to absorb the toxic assets of struggling U.S. financial firms.
The Dow Jones industrial average closed at 8375.45, up 200.75 points, or 2.5 per cent. The broader S&P 500 index closed at 874.09, up 28.38 points, or 3.4 per cent. It was the index's fourth gain in four trading days.
Financials were the big winners for the day. Wells Fargo & Co., which reported a loss of $2.55-billion in the fourth quarter but said its dividend was safe, surged 30.9 per cent, JPMorgan Chase & Co. rose 10.4 per cent and Bank of America Corp. rose 13.7 per cent.
In Canada, the S&P/TSX composite index closed at 8906.23, up 146.60 points, or 1.7 per cent. There, financials also stormed higher on the premise that some degree of risk surrounding the sector was about to be lifted, thanks to moves in the United States. Toronto-Dominion Bank rose 6.7 per cent and Bank of Nova Scotia 5.3 per cent.
Energy stocks were mixed, after the price of crude oil rose 58 cents, to $42.16 a barrel. EnCana Corp. rose 4.9 per cent and Talisman Energy Inc. rose 1.3 per cent, but Canadian Oil Sands Trust slipped 3.3 per cent.
Gold producers did not fare well, with the price of gold falling to $888.20 an ounce, down $11.30. Barrick Gold Corp. fell 3.5 per cent and Goldcorp Inc. fell 4.6 per cent.
Copyright 2001 The Globe and Mail
Investors weren't in any mood Wednesdy to hear about the negative forecasts of the "experts," but were more than happy to buy stocks in anticipation of big stimulus cheques and bailout plans, sending North American indexes sharply higher.
The International Monetary Fund released its latest forecast for global economic growth, shredding earlier projections of a modest downturn and incorporating a new vision of real trouble ahead. The U.S. economy is now projected to contract by 1.6 per cent in 2009, as against an earlier forecast of a decline of 0.7 per cent. For Canada, the new forecast is for a contraction of 1.2 per cent, down from 0.3 per cent growth. The global economy is expected to slip deeper into recession.
Meanwhile, the U.S. Federal Reserve ramped up the grim talk in its latest monetary policy statement, released in the afternoon.
"Information received since the committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending," the Fed said. "Furthermore, global demand appears to be slowing significantly."
You wouldn't know it from stock market moves, though, which instead reflected hopes for a $900-billion (U.S.) stimulus package from the U.S. administration and the creation of a "bad bank" to absorb the toxic assets of struggling U.S. financial firms.
The Dow Jones industrial average closed at 8375.45, up 200.75 points, or 2.5 per cent. The broader S&P 500 index closed at 874.09, up 28.38 points, or 3.4 per cent. It was the index's fourth gain in four trading days.
Financials were the big winners for the day. Wells Fargo & Co., which reported a loss of $2.55-billion in the fourth quarter but said its dividend was safe, surged 30.9 per cent, JPMorgan Chase & Co. rose 10.4 per cent and Bank of America Corp. rose 13.7 per cent.
In Canada, the S&P/TSX composite index closed at 8906.23, up 146.60 points, or 1.7 per cent. There, financials also stormed higher on the premise that some degree of risk surrounding the sector was about to be lifted, thanks to moves in the United States. Toronto-Dominion Bank rose 6.7 per cent and Bank of Nova Scotia 5.3 per cent.
Energy stocks were mixed, after the price of crude oil rose 58 cents, to $42.16 a barrel. EnCana Corp. rose 4.9 per cent and Talisman Energy Inc. rose 1.3 per cent, but Canadian Oil Sands Trust slipped 3.3 per cent.
Gold producers did not fare well, with the price of gold falling to $888.20 an ounce, down $11.30. Barrick Gold Corp. fell 3.5 per cent and Goldcorp Inc. fell 4.6 per cent.
Copyright 2001 The Globe and Mail
