Wednesday's stock rally lost some steam in afternoon trading, even though major indexes ended the day with big gains as investors bet that European authorities were getting serious about dealing with the region's debt crisis.
The Dow Jones industrial average closed at 11,518.85, up 102.55 points, or 0.9 per cent – though down more than 100 points in the final 90 minutes of trading. The broader S&P 500 closed at 1,207.25, up 11.71 points, or 1 per cent. In Canada, the S&P/TSX composite index closed at 12,029.96, up 154.41 points, or 1.3 per cent.
The rally began despite a disappointing unofficial start to the third quarter earnings season, when Alcoa Inc.'s earnings missed expectations by a long shot. The shares slumped 2.4 per cent, representing the biggest slide among the 30 stocks within the Dow.
However, investors apparently don't believe that Alcoa's fortunes mean much to the economy, given that economically sensitive stocks led Wednesday's rally. As well, they seized upon strong language from the European Commission's president, who laid out a blueprint for recapitalizing European banks, though leaving out details. Those omissions underlined the fact that while authorities agree that the crisis requires strong action, there is no consensus yet on how to proceed.
The rally began to fade soon after the Federal Reserve released the minutes from its last monetary policy meeting. While there were few surprises, the minutes showed that another round of quantitative easing was discussed but the idea was ultimately shelved because of the low risks of deflation.
Nonetheless, U.S. financials were strong, with Bank of America Corp. up 3.3 per cent and JPMorgan Chase & Co. up 2.8 per cent. Among other key stocks, General Electric Co. rose 1.6 per cent and Walt-Disney Co. rose 3.5 per cent.
Among Canadian names, energy stocks were strong, with Suncor Energy Inc. up 2.6 per cent. Royal Bank of Canada rose 1.8 per cent and Potash Corp. of Saskatchewan Inc. rose 1.2 per cent.
However, Research In Motion Ltd. fell 3.5 per cent following a third straight day of outages for some BlackBerry customers.