TORONTO — Canada’s main stock index was up nearly 100 points to finish trading on Wednesday, helped by gains in the tech sector, while U.S. markets also rose following a broad reversal.
The S&P/TSX composite index was up 98.83 points at 27,152.97.
In New York, the Dow Jones industrial average was up 231.49 points at 44,254.78. The S&P 500 index was up 19.94 points at 6,263.70 while the Nasdaq composite was up 52.69 points at 20,730.49.
“The smaller overall moves at the close, they really belie what was some intraday volatility, given the press conference with Trump about his potential intention to try and fire the Fed Chairman (Jerome) Powell,” said Tamsin Wilding, principal and portfolio manager of fixed income at Leith Wheeler Investment Counsel Ltd.
U.S. President Donald Trump sent the U.S. stock market on a jagged round trip after saying he had “talked about the concept of firing” the head of the U.S. Federal Reserve. Such a move could help Wall Street get the lower interest rates it loves but would also risk a weakened Fed unable to make the unpopular moves needed to keep inflation under control.
Stocks had been rising modestly in the morning, before news reports saying that Trump was likely to fire Fed Chair Jerome Powell quickly sent the S&P 500 down by 0.7 per cent. When later asked directly if he was planning to fire Powell, Trump said, “I don’t rule out anything, but I think it’s highly unlikely.” That helped calm the market, and stocks erased their losses, though Trump added that he could still fire Powell.
“What happened here is that we really got a glimpse of what the market reaction function is if Trump did manage to jump through some of those legal loopholes and get Powell ousted,” Wilding said.
She added that the reaction was most apparent in the rates market.
“We saw both quite an aggressive curve steepening come through, front-end yields were lower. That’s an anticipation of having a more dovish Fed Chair, who would potentially ease rates at a faster rate than what Powell would,” she said.
“On the flip side, we then saw the long-end yields moving higher. So, just reflecting both those inflationary impulses, less confidence in that fiscal trajectory and debt management, as well as confidence concerns with that.”
In the bond market, the yield on the 10-year U.S. Treasury fell to 4.45 per cent from 4.50 per cent late Tuesday. It had been as low as 4.44 per cent earlier in the day, but it climbed following the reports that Trump was likely to fire Powell.
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