TORONTO – Canada’s main stock index moved up in late morning trading on Wednesday, while U.S. markets charged ahead with the Dow Jones industrials posting a triple-digit advance, as global trading stabilized following three days of tumult.
The S&P/TSX composite index was up 34.30 points, or 0.23 per cent, to 15,398.23, after 90 minutes of trading, boosted by the health-care sector which includes the volatile marijuana space.
In New York, the Dow Jones industrial average was up 326.37 points, or 1.31 per cent, to 25,239.14. The S&P 500 index was up 24.92 points, or 0.92 per cent, to 2,720.06 and the Nasdaq composite index was up 39.24 points, or 0.55 per cent, to 7,155.12.
The strong gains in the U.S. came a day after markets swung wildly, but finished higher following their biggest percentage decline since August 2011 on Monday when the Dow plunged nearly 1,200 points or 4.6 per cent, erasing its gains for year. On Tuesday, the Dow finished the trading session up 567.02 points.
“I think we have to look towards stock bargain hunters for yesterday’s moves as many came out look to pick up cheap stock after the last few days of downside,” said James Hughes, chief market analyst with AxiTrader.
“The question everyone is asking is just where this leaves global equity indices, and my answer would be … incredibly nervous. Even though we have seen a big sell off the markets are still in line for a correction, which would be deeper than what he have currently seen.”
While markets have calmed somewhat, investors are still far more nervous than they were just a few days ago. The VIX index, which is called Wall Street’s “fear gauge” because it measures how much volatility investors expect in the future, is currently at 21, about double where it was two weeks ago. It spiked above 50 early Tuesday.
Stocks began to fall last Friday after U.S. jobs data showed wages growing more than anticipated raising worries that creeping signs of higher inflation might push the U.S. Federal Reserve to increase interest rates more quickly.
On Tuesday, St. Louis Federal Reserve president James Bullard tried to talk down inflation concerns a bit, saying that he cautioned “against interpreting good news from labour markets as translating directly into higher inflation.” Dallas Federal Reserve president Robert Kaplan said Wednesday that the stock market correction is a healthy one.
In currency market, the Canadian dollar was trading at 79.74 cents US, down from an average price of 79.81 cents US on Tuesday. The loonie has slipped 1.57 cents U.S. since Thursday as jittery investors seek the U.S. dollar as a safe haven in times of distress.
On the commodities front, the March crude contract was down US$1.06 to US$62.33 per barrel and the March natural gas contract down six cents to US$2.70 per mmBTU.
The April gold contract was down US$6.80 to US$1,322.70 an ounce and the March copper contract was down eight cents to US$3.13 a pound.
— With files from The Associated Press.