TORONTO – Broad-based strength lifted Canada’s main stock index 1.5 per cent Wednesday, while U.S. stocks also rallied after the U.S. Federal Reserve left its outlook for interest rate cuts this year intact.
“For a day, markets are breathing a sigh of relief,” said John Zechner, chairman and lead equity manager at J. Zechner Associates.
“Markets have sold off so sharply, so we may have been overdue for a bounce.”
The S&P/TSX composite index closed up 363.14 points at 25,069.21.
In New York, the Dow Jones industrial average was up 383.32 points at 41,964.63. The S&P 500 index was up 60.63 points at 5,675.29, while the Nasdaq composite was up 246.67 points at 17,750.79.
As expected, the Fed held its key interest rate steady on Wednesday.
Chair Jerome Powell said data shows the U.S. economy is still solid, despite the uncertainty faced by consumers and businesses that’s been showing up in recent sentiment surveys.
“Given where we are, we think our policy is in a good place to react to what comes, and we think that the right thing to do is to wait here for greater clarity about what the economy’s doing,” he said.
The Fed projected weaker growth and higher inflation for the year than it had forecast earlier, but continues to expect two interest rate cuts.
The announcement wasn’t worse than expected, said Zechner, despite a huge change in sentiment over the past month.
“For now, it’s just … there’s no new disasters, there’s no new tariffs,” he said.
“So, you know, maybe we can have a bit of a relief rally.”
However, the uncertainty of U.S. President Donald Trump’s tariff policy still hangs over investors, including the April 2 deadline when more duties are scheduled to come into force, said Zechner.
In both Canada and the U.S., tariffs threaten to cause a “worst-case scenario” for investors, he said, where economic growth weakens while inflation rises.
The Bank of Canada cut interest rates last week, and has been cutting at a faster pace than the Fed as the Canadian economy has weakened more under the weight of higher rates.
Bank of Canada governor Tiff Macklem has warned the central bank has limited power if it faces both reignited inflation and weakening economic growth at the same time due to tariffs.
The Canadian dollar traded for 69.80 cents US compared with 69.93 cents US on Tuesday.
The May crude oil contract was up 14 cents US at US$66.91 per barrel and the April natural gas contract was up 20 cents US at US$4.25 per mmBTU.
The April gold contract was up 40 cents US at US$3,041.20 an ounce and the May copper contract was up nine cents US at US$5.10 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published March 19, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
