TSX racks up three-digit loss as oil sinks; U.S. Fed stands pat on rates

TORONTO – Canada’s main stock index pulled back more than one per cent with a three-digit loss Wednesday, as oil prices fell and the U.S. Federal Reserve announced it wasn’t ready to move on interest rates yet.

At the Toronto Stock Exchange, the S&P/TSX composite index lost 183.60 points at 14,594.72, pulled lower by all sectors.

On Wall Street, the Dow Jones industrial average declined 77.46 points to 17,959.64 and the S&P 500 slipped 13.78 points to 2,097.94. The Nasdaq composite fell 48.01 points to 5,105.57.

The U.S. central bank says it’s leaving interest rates unchanged, but hinted that a hike will likely come soon.

Fed policy-makers said the case for an increase has “continued to strengthen” as the economy shows steady growth. Most Fed watchers expect a rate increase at the central bank’s next two-day meeting which begins Dec. 13.

The markets had pegged the possibility of a hike this month as slim while the U.S. prepares to head to the polls to vote for a new president in less than a week.

Michael Currie, a vice-president and investment adviser at TD Wealth, said the Fed has always maintained that it will move on rates if the economic data supports it — but an uncertain election result looming also likely had some bearing on their decision.

“In a sense, they’re being political in trying to be non-political,” he said. “Any kind of move here would’ve made a push for one (political) party or another… They still have a little bit of wiggle room until the end of the year and they played it safe.”

But Currie said the Fed needs to make a move sooner rather than later, because the expectation is that there will be at least one increase this year.

“There are two big risks they have. One is that they don’t want to scare the markets… They don’t want to deviate from the plan because the market likes certainty,” he said.

“But the other risk they run is not doing it when they have come out and said they’re going to raise rates… If they don’t do it, then they will lose their credibility. They’re damned if they do and damned if they don’t.”

In currencies, the Canadian dollar dipped 0.02 of a U.S. cent to 74.65 cents US, as crude prices fell for a fourth straight session. The December crude contract fell $1.33 to US$45.34 per barrel.

Investors continued to flock to the safety of gold, driving bullion prices up $20.20 at US$1,308.20 an ounce.

Other commodities were mixed with December natural gas dropping 11 cents to US$2.79 per mmBTU and December copper contracts gaining one cent at US$2.23 a pound.

— With files from The Associated Press

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Note to readers: This is a corrected story. An earlier version used an incorrect number for the S&P/TSX and the Nasdaq.