North American stocks regained some lost ground on Tuesday afternoon, after investors welcomed moves by the U.S. Federal Reserve to prod the slowing economic recovery.
The Dow Jones industrial average closed at 10,644.25, down 54.50 points or 0.5 per cent - after being down nearly 150 points earlier in the day. The broader S&P 500 closed at 1121.06, down 6.73 points or 0.6 per cent. In Canada, the S&P/TSX composite index closed at 11,838.29, down 25.27 points or 0.2 per cent.
The early declines were largely the result of lower-than-expected Chinese imports along with a dip in U.S. productivity, which fed concerns about the health of the global economy's greatest engines.
However, the much-anticipated monetary policy statement from the Fed helped ease those concerns, with a modest proposal to buy long-term U.S. Treasury bonds in an attempt to hold down borrowing costs. Then again, the Fed also lowered its forecast for the economy, remarking that "the pace of economic recovery is likely to be more modest in the near term than had been anticipated" - giving more bearish investors something to chew on.
Riskier stocks with a strong exposure to the economy led the declines. Intel Corp. fell 4 per cent, Alcoa Inc. fell 2.7 per cent and Bank of America Corp. fell 2 per cent. Defensive stocks fared far better, with Merck & Co. Ltd. rising 1.2 per cent, Procter & Gamble rising 0.7 per cent and AT&T Inc. rising 0.6 per cent.
Among Canadian stocks, Maple Leaf Foods Inc. rose 4.9 per cent on news that the Ontario Teachers' Pension Plan has sold a 10-per-cent stake in the company to West Face Capital.
Meanwhile, commodity producers were mixed, even as commodity prices fell. Crude oil fell to $80.25 (U.S.) a barrel, down $1.23. Gold fell to $1198 an ounce, down $4.60. Among energy stocks, Canadian Natural Resources Ltd. fell 2 per cent but Suncor Energy Inc. rose 1.3 per cent. Gold producers moved higher after an earlier retreat: Barrick Gold Corp. rose 1 per cent and Goldcorp Inc. rose 0.9 per cent.