Markets close higher ahead of Fed meeting

Americans bought more cars, furniture and electronics in August, but held back on most other retail purchases. The U.S. Commerce Department says spending at retail businesses rose 0.2 per cent last month, the smallest gain in four months.

Analysts had been expecting a gain of 0.4 per cent in August but revised figures issued Friday showed July spending was stronger than first estimated. The department’s revised estimate for July was a gain of 0.4 per cent, up from 0.2 per cent

“It came out pretty much in the wash. A tad to the negative side but not by very much,” said Bob Gorman, chief portfolio strategist at TD Waterhouse. “I would say the figures were marginally softer than anticipated but only marginally.”

Gorman said the figures likely aren’t strong enough to change the Fed’s mind about starting to reduce its stimulus at the end of its two-day policy meeting next Wednesday.

The Fed has been buying US$85 billion in bonds each month in an attempt to keep a lid on interest rates and to boost lending. Currently, most analysts expect the central bank to begin tapering its stimulus by US$10 billion.

“Generally speaking, people are not making huge bets prior to the Fed announcement,” said Gorman.

Trading was light as the TSX and Wall Street headed into the weekend and the start of the Jewish Yom Kippur holiday at sundown.

The Dow Jones industrials jumped 75.42 points to 15,376.06, the Nasdaq was up 6.22 points at 3,722.18 and the S&P 500 was ahead 4.57 points at 1,687.99.

Meanwhile, higher energy costs pushed U.S. wholesale prices up 0.3 per cent last month. Prices were up a modest 1.4 per cent over the past year, the lowest year-over-year gain since April.

The Commerce Department reported that U.S. businesses restocked their shelves and warehouses in July at the fastest pace since January as sales rose, a hopeful sign for economic growth. The department said business stockpiles increased 0.4 per cent in July from June, after ticking up just 0.1 per cent the previous month.

In other economic news, Statistics Canada reported that Canadians boosted their borrowing in the second quarter. The federal agency says the ratio of household credit market debt to disposable income hit a new high of 163.4 per cent in the second quarter, compared with 162.1 per cent in the first three months of 2013. On the other hand, Statistics Canada also said rising home prices pushed up household net worth in the quarter.

The metals and mining sector was the leading decliner on the TSX, down 0.9 per cent. Shares in Sherritt International (TSX:S) fell 2.82 per cent, or 11 cents, to $3.79. December copper was down a penny at US$3.20 a pound.

The gold sector was the biggest advancer, up 1.82 per cent despite lower bullion prices. On Thursday, the price of gold fell to its lowest level in a month, while on Friday it declined another $22 to US$1,308.60 an ounce.

The October crude contract dipped 39 cents to US$108.21 a barrel.

Gorman said the price of gold will likely continue to fall if tensions surrounding Syria continue to abate. People tend to buy gold in times of crisis as a safe haven.

Earlier this week, the Syrian government agreed to a Russian proposal to hand over its chemical weapons to international control to avoid a U.S. military strike. Top U.S. and Russian diplomats are holding talks in Geneva to discuss the specifics as United Nations inspectors prepare to turn in their report this weekend.

In corporate news, several Canadian pipeline companies struck a deal that could resolve a dispute over how key infrastructure is shared in the Greater Toronto Area.

TransCanada (TSX:TRP) said it has reached a revised agreement with Enbridge (TSX:ENB), Gaz Metro and Union Gas for a revised framework for tolls on TransCanada’s mainline and the proposed Kings North project. TransCanada shares were down 0.24 per cent to $45.37 and Enbridge shares fell 0.14 per cent to $42.28.