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Fed decision leaves Wall Street mixed; TSX rallies on US$45 a barrel oil

TORONTO – North American stock markets were mixed Wednesday following the latest rate announcement from the U.S. Federal Reserve that failed to contain any real surprises.

As expected, the central bank said it plans to leave its benchmark interest rate unchanged following a two-day meeting.

Fed officials pointed to continued weakness in the U.S. economy in areas such as consumer spending, business investment and exports for the decision, and once again, expressed concern about a slowing global economy.

The Fed scaled back its strong language this time around, no longer mentioning international “risks,” like it did last month, and instead, said it plans to “closely monitor” global economic and financial developments.

The toned down statement left investors continuing to wonder whether the central bank’s next rate hike will come at its next meeting in June. Although the Fed did not rule out the possibility, it also gave no hint to investors that was considering such action.

“We need to see how the summer goes and determine if the economic data and market conditions are in line with the high level of volatility that we saw earlier this year or more in line with the stability and calm that we saw in the second half of 2015,” said Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory in Ottawa.

“We’ve seen two extremes of market behaviour in a short period of time. Which one of those behaviours will prevail will determine where monetary policy will go.”

The Dow Jones industrial average gained 51.23 points at 18,041.55, while the broader S&P 500 was barely changed, up 3.45 points to 2,095.15.

The Nasdaq composite shed 25.14 points to 4,863.14 as shares in Apple fell six per cent after the tech giant reported its first decline in quarterly revenue since 2003.

In Toronto, the S&P/TSX composite extended gains for a second day as the price of crude hit a high not seen since November.

The index, which is weighted heavily in commodities, climbed 78.22 points to 13,887.66 after the June contract for West Texas Intermediate crude shot up $1.29 to US$45.33 a barrel. It’s the first time oil has closed above US$45 in five months.

The Toronto marker was also helped by gains in the metals and mining, utilities and materials sectors.

The Canadian dollar continued to benefit from the rise in oil, adding 0.02 of a U.S. cent to close at 79.25 cents US.

In other commodities, June natural gas pulled back a penny to US$2.15 per mmBtu, while June gold gained $7 to US$1,250.40 a troy ounce. July copper slipped two cents to US$2.22 a pound.

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