By Mike Keerma
The major U.S. and Canadian stock indices remained about flat on the week,
despite surging Canadian GDP growth in May, a strong second-quarter reading
on U.S. economic growth, and a stand-pat interest rate announcement by the
U.S. Federal Reserve. Toronto’s benchmark
S&P/TSX Composite Index edged down -0.4% on the week, even though both
crude oil made gains, with crude oil advancing 9% from last week’s close. New York’s
S&P 500 Composite Index remained flat on the week, while the
Nasdaq Composite Index edged down a minuscule -0.2%.
Canadian GDP reversed softer growth in March and April, gaining 0.6% in
May, growing at a 4.6% year-over-year pace, driven by increasing output in
the energy, mining sectors, and financial services sectors.
U.S. GDP grew 2.6% in the second quarter from the first, for a 2.1%
year-over-year growth rate. The strong showing was led by a 2.8% surge in
household spending, fed by strong job-creation, low unemployment, and
continuing soft inflationary pressures.
The Federal Reserve Board’s Open Market Committee, meanwhile, kept its
federal funds rate unchanged at a target 1.0%-1.25% on Wednesday. The Fed
indicated, however, that it was still proceeding with its plans for
monetary tightening, saying it plans to implement its “balance sheet
normalization program relatively soon” by shedding some of its Treasury
bond and mortgage-backed security holdings.
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