Canada's benchmark stock index reversed early losses and churned out a 167-point gain on Thursday as positive economic signs out of the U.S. outweighed pessimism over the sustainability of a recent bull market.
The S&P/TSX composite index gained 167 points to 12,277 at closing, up more than 1.4 per cent. Earlier, the TSX had been more than 70 points lower.
U.S. stocks experienced even stronger turnarounds with the Dow Jones industrials up 180 points to 15,176, the Nasdaq rising 44 points to 3,445 and the S&P 500 index up 23 points to 1,636.
All had opened sharply lower.
On the TSX, BlackBerry was a leader, gaining more than five per cent after an analyst at Societe Generale upgraded his target for the company.
Markets had slumped earlier in the day ever since the world's central banks started showing signs they won't be willing to keep the stimulus taps on forever. In late May, Federal Reserve chief Ben Bernanke said the Fed might pull back on its $85 billion-a-month bond-buying program, if economic data improves.
The program, known as quantitative easing, has fuelled a strong rally on U.S. markets.
Earlier this week, Japan's central bank gave a similar hint that its own bond-fuelled stimulus program has an expiry date. That let out a lot of the air that had been in equities for the last few weeks. The Nikkei lost 6.4 per cent on Wednesday, bringing Japan's main stock index solidly into bear market territory (defined as a contraction of more than 20 per cent.)
In economic news, two data points out of the U.S. showed mildly positive signs about the world's largest economy, which should have sent stocks higher. Retail sales were up and jobless claims down, a positive sign for the U.S. economy.
By the afternoon, that was enough to bring the punch bowl back to equity markets.
"The markets have become more and more dependent on the steroids that the central banks across the globe are providing," said Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory, a Raymond James company.
"And it takes more and more now for the market to become intoxicated."
The loonie had gained a little more than half a cent to 98.43 cents US as markets closed on Friday.