A report from the Fed open market committee downgrading growth for the U.S. sent stocks shooting higher this afternoon and reversed the course of oil and the Canadian dollar.

Oil continued its slide on Wednesday, sinking to $42 US a barrel at mid-morning before bouncing upwards in the afternoon.

West Texas Intermediate, a key North American crude futures contract, was up $1.53 at the close of trading to $44.99 US a barrel, after hitting a fresh six-year low of $42.12 earlier in the day. Western Canada Select, a key Canadian contract, bounced up $3.64 to $33.35 US, still so low it augurs more bad times for the Canadian oilpatch.

Oil had been losing ground for seven trading sessions, amid reports that production continues to rise and oil storage tanks are approaching capacity. Late Tuesday, industry group the American Petroleum Institute said U.S. crude stockpiles rose by 10.5 million barrels in the week ended March 13.

The U.S. Energy Information Administration had fresh data at midday Wednesday showing oil storage at Cushing, Oklahoma was at record levels.

The crude-sensitive Canadian dollar sank as low as 77.93 cents US this morning. But the Fed's downgrade of the U.S. economy hurt the U.S. dollar and the loonie was trading at 78.87 cents US at the close.

Stocks racked up losses in both Toronto and New York in the morning as investors waited for the U.S. Federal Reserve's latest interest rate pronouncement.

But after the U.S. central bank downgraded its outlook for GDP growth, stocks headed higher, even though it sent the signal that rate hikes could come as soon as June.

The optimism was based on both the slower pace of rate hikes proposed by the Fed and the fact that its projections for U.S. growth were moderating.

The TSX was up 63 points at 14,962 at the close, despite news of fresh layoffs at Talisman, Athabaska Oil and ConocoPhillips.

The Dow shot up 227 points to 18,076 and the S&P 500 jumped 25 points to 2,099. The Nasdaq climbed 45 points to 4982.