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At midday: Dow gains, TSX slumps ahead of Fed statement

U.S. Federal Reserve Board chairman Ben Bernanke.

JIM BOURG/REUTERS

North American stocks were mixed in midday trading on Wednesday, following a disappointing reading on U.S. manufacturing activity and ahead of a much-anticipated monetary policy statement from the Federal Reserve.

At noon, the Dow Jones industrial average was up 37.73 points or 0.3 per cent, to 13,046.41.

The broader S&P 500 was up 3.36 points or 0.2 per cent, to 1,382.68. In Canada, the S&P/TSX composite index was down 22.79 points or 0.2 per cent, to 11,641.92.

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The economic backdrop was uneven, and no doubt will feed into expectations that the Fed will say something about the situation in its policy statement in the afternoon.

The ISM manufacturing index for July was relatively unchanged from June, with a reading of 49.8. That was slightly below expectations among economists and marks the second straight month below 50 – the threshold that separates expansion from contraction.

However, the news wasn't all dismal. Construction spending in June rose 0.4 per cent over the previous month, matching the consensus expectation.

And the ADP report on private sector employment showed job gains of 163,000 in July, which was well above expectations. The report comes ahead of the official payrolls report from the U.S. Labor Department on Friday.

Among major European indexes, Germany's DAX fell 0.3 per cent but the U.K.'s FTSE 100 rose 1.4 per cent.

The European Central Bank and the Bank of England will release their monetary policy statements on Thursday.

Within the S&P 500, defensive areas showed some of the biggest gains: Telecom stocks rose 0.8 per cent, while utilities and health care stocks rose 0.6 per cent each. Information technology stocks fell 0.2 per cent.

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Within Canada's benchmark index, materials were the biggest drags, falling 1.4 per cent. Industrials fell 0.8 per cent and financials fell 0.3 per cent but energy stocks rose 0.2 per cent.

Among commodities, crude oil rose to $88.86 (U.S.) a barrel, up 80 cents. Gold fell to $1,606 an ounce, down $8.50.

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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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