A trader works at the brokerage company Gradual Investimentos, in Sao Paulo, on August 9, 2011.YASUYOSHI CHIBA
U.S. stocks pared gains in volatile trade on Tuesday after the U.S. Federal Reserve said it would keep interest rates low for at least another two years.
Investors had been hoping for action from the Fed to alleviate worries the economy could fall back into recession, which had pushed Wall Street higher for most of the day.
However, the cental bank's options appeared to be limited because the current crisis is not liquidity-driven, as it was in 2008. But the market still responded favorably to the Fed's show of concern.
Longer-dated U.S. Treasuries fell.
The Dow Jones industrial average dropped 5.6 per cent on Monday and the S&P 500 dropped 6.7 per cent. Although Tuesday trading was volatile, both exchanges posted significant gains, of 4.0 per cent and 4.7 per cent, respectively. The NASDAQ also gained 5.3 per cent.
The Toronto Stock Exchange joined the Monday plummet, but gained 3.8 per cent by close Tuesday.
The loonie briefly dipped below parity with the American dollar overnight, but was back over $1.02 as the markets closed.
At a record $1778 (U.S.) an ounce, gold continued its multi-day rally Monday – the biggest since the financial crisis of 2008, Reuters reports. This month it's risen about 8 per cent. Its price was just above $1737 as the markets closed Tuesday.
Oil fell to about $79 a barrel on Monday, but saw minor gains on Tuesday to over $80.
In London, the FTSE bounced up 1.9 per cent by Tuesday's close, after seven sessions of drops.
For a brief moment, Bloomberg reported, Apple Inc. surpassed Exxon Mobil Corp. to become, by market value, the world's largest company. But it was only a dip, and Apple fell back to second place.