The Toronto Stock Exchange was higher on Monday. Mark Blinch/Reuters Signs that American consumers are spending more money and the possibility of more stimulus measures from the U.S. Federal Reserve pushed stock markets sharply higher on Monday.
The S&P/TSX composite index jumped 177 points to 12,504 with all sectors positive save for the gold sector, as the price of the metal dipped after two days of gains.
Research in Motion, Ltd. was one of the index's major movers, up more than 4 per cent to $29.98.
Stock markets made solid gains last week following steep losses the week before with the TSX rising 2.66 per cent and the Dow industrials up 4.3 per cent.
But market sentiment remains fragile and other economic indicators this week are expected to show slowing global growth. Investors will take in data Tuesday on how the Canadian economy performed during June. It is expected to show growth close to zero that month and for the second quarter.
American markets were up sharply after Fed chairman Ben Bernanke emphasized the positive elements of the American economy, saying the economy was headed for long-term growth. Bernanke did not announce any new stimulus measures in Friday's speech, but left open the possibility for further monetary action.
He also called on the U.S. government to do more to boost the economy.
"I think we're all of the mind where we're in a muddle along economy," said Jim Muir, director at Fraser Mackenzie.
Bernanke "is now recognizing that he can't, through monetary policy, cure long term problems. And so therefore the government will have to take some action and it's limited but as long as neither one of them does anything stupid, the markets are still convinced that things will gradually improve."
The Dow Jones industrial average climbed 254 points to 11,539. The Nasdaq composite index was up 82 points to 2,562 while the S&P 500 index gained 33 points to 1,210.
The Canadian dollar also benefited from the Fed chairman's comments, rising 0.43 of a cent to 102.30 cents US.
The TSX Venture Exchange rose 15.31 points to 1,767.63.
There was also relief that the storm that had been hurricane Irene wasn't as bad as feared. Irene caused widespread flooding and millions of Americans were without power. However a consulting firm predicted that insured damages would range between $2 billion and $3 billion US, lower than initially estimated and that was good for insurance stocks. Travelers Cos. ran up four per cent while AllState gained 7.05 per cent.
Investors were encouraged by a U.S. Commerce Department report showing consumer spending rose 0.8 per cent in July, better than the 0.5 per cent rise that economists expected. Personal income increased 0.3 per cent last month, slightly higher than the modest 0.2 per cent in June.
Commodity prices Monday were mixed, with oil prices higher. The October crude contract on the New York Mercantile Exchange gained $1.68 to US$87.05 a barrel, pushing the energy sector up 2.34 per cent. Suncor Energy gained 60 cents to $30.38 while Canadian Natural Resources climbed 99 cents to $35.83.
The base metals sector was ahead 3.4 per cent as copper prices declined one cent to US$4.09. Teck Resources was up 99 cents to $41.60 while First Quantum Minerals ran up 87 cents to $22.19.
Also improving investor sentiment Monday was news that Greece's second and third largest lenders, Eurobank and Alpha Bank, announced plans to merge in order to better withstand the country's acute financial crisis. The widely anticipated move would create Greece's biggest bank, and will see a 500 million euro investment from a Qatari investment fund, Paramount Services Holding Ltd.
The gold sector was down almost one per cent while the December contract on the Nymex lost $5.70 to $1,791.60 US an ounce. Goldcorp Inc. declined 58 cents to $50.40 and Barrick Gold Corp. faded 99 cents to $48.95.
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