North American stock markets barely moved as U.S. Fed holds rate steady

TORONTO – Signs that there’s still a chance the U.S. Federal Reserve may raise interest rates by the end of the year weren’t enough to give North American stock markets any direction Wednesday.

The S&P/TSX composite index in Toronto barely moved, losing 3.46 points at 14,546.54, with gains in gold stocks offsetting losses from the energy sector.

It was a similarly tepid environment on Wall Street, as the Dow Jones industrial average dipped 1.58 points at 18,472.17, while the broader S&P 500 composite index declined 2.6 points to 2,166.58.

The Nasdaq composite gained 29.76 points to 5,139.81, boosted by shares in Apple which soared more than six per cent due to an encouraging earnings report.

The tech giant’s shares have been a cause for concern this year as investors became worried about whether Apple can continue to sustain its growth. It reported lower revenue and iPhone sales in its last quarter, but still beat analysts’ expectations by earning US$10.5 billion.

In economic news, the Fed announced it was once again keeping interest rates unchanged and noted it doesn’t think there are still any near-term risks to the economy.

The slightly more hawkish comments signalled to the markets that perhaps a rate hike in September may still be on the table for the U.S. central bank.

Some had forecasted the bank wouldn’t make a move until December or even new year.

The Fed has been reluctant to move on rates due to some poor economic indicators from the U.S., on top of global risks such as the aftermath from Britain’s recent vote to leave the European Union.

“They’re in a tough position,” said Kevin Headland, a senior investment strategist at Manulife Investments. “They want to normalize as soon as possible.”

The risk of the Fed waiting too long to raise rates is that it leaves the bank with few options to stimulate the economy if it enters into a recession.

“The longer you wait, you’re going to get to the end of the economic cycle,” Headland said. “Should you get into a recession, what type of opportunity do you have at your disposal when interest rates are already so low?”

But Headland notes that the Fed also might also be dissuaded from making any moves this year due to the uncertainty surrounding the U.S. presidential election in November.

Meanwhile, in the currency market, the Canadian dollar was down 0.01 of a U.S. cent to 75.81 cents US, tracing the downward path of September crude, which fell $1 at US$41.92 per barrel.

In other commodities, the August gold contract rose $5.90 to US$1,326.70 an ounce, while September copper contracts were down four cents to US$2.19 a pound and September natural gas was down two cents at US$2.66 per mmBTU.

— With files from The Associated Press.

Follow @LindaNguyenTO on Twitter.