04:22 PM EDT, 05/01/2024 (MT Newswires) -- The Toronto Stock Exchange's S&P/TSX Composite Index fell off afternoon highs on Wednesday after the Federal Reserve's policy committee ended its meeting leaving US interest rates unchanged, as the index closed up 14.66 points to close at 21,729.2, up 14.66 points, but well under the session high of near 21,870.

The US central bank left its benchmark rate unchanged, pushing back expectations for a cut to rates, but also easing fears of another rate hike as inflation remains stubbornly above the Fed's 2% target as Fed chair Jerome Powell said another rise is unlikely.

"The Chairman's opinion that the next move in rates is unlikely to be a hike should quell concerns that policymakers are becoming impatient surrounding the path back to 2% inflation. Powell to shut the door on any discussion of stagflation. He not only pointed to the very robust economic growth currently being seen, but also to the only slightly above-target inflation readings in responding to a question on stagflation. The Chairman stated unequivocally that he neither saw the "stag" nor the "flation" to warrant any discussion of the topic," Desjardins economist Royce Mendes noted.

The biggest decliners on the day are Battery Metals and Health Care, down 3.9% and 5% respectively.

Utilities and Information Technology are the biggest gainers, up 1.4% and 0.5%, respectively.

Cannabis stocks surged Tuesday afternoon on reports that the U.S. Drug Enforcement Administration intends to reclassify marijuana to Schedule 3 of the Controlled Substances Act. Canopy Growth (WEED.TO), which almost doubled to hit $20.45 yesterday on the news, closed down 23% to C$115.76. It is also the most actively traded on the TSX with 8.02 million shares changing hands.

West Texas Intermediate (WTI) crude oil fell to the lowest since mid-March on Wednesday after a report showed an unexpected rise in US crude inventories. West Texas Intermediate crude for June delivery closed down US$2.93 to settle at US$79.00 per barrel, the lowest since March 12. July Brent crude, the global benchmark, was last seen down US$2.87 to US$83.46.

Gold moved higher mid-afternoon on Wednesday as the dollar steadied and treasury yields were mixed ahead of the end of the Federal Reserve's two-day policy committee meeting that is expected to leave interest rates unchanged. Gold for June delivery was last seen up US$18.60 to US$2,321.50 per ounce, sticking above the US$2,300 mark following a correction after closing at a record US$2,413.80 on April 19.

Market focus this Wednesday afternoon was very much on the U.S. Federal Reserve's monetary policy update.

According to Desjardins' Mendes, U.S. central bankers "sent a clear signal that they're dissatisfied with the recent evolution of consumer prices."

While they acknowledged there had been a material deceleration in inflation over the course of the past year, policymakers added a sentence to their communique which noted the lack of further progress more recently, Mendes noted.

"Given that the economy still looks solid, that's not as hawkish as what some market participants had feared," he said, before adding: "It seems like Fed officials are opting to simply tweak their previous plans rather throw them out the window."

"Overall," Mendes added, "despite the recent run of hotter-than-expectation inflation data, it appears like the Fed isn't ready to chart a new course just yet."

BMO Economics noted that in his press conference, Powell said, despite the poor inflation start to the year, rate hikes are still "unlikely" - which, BMO also noted, is how he portrayed them back in December. Although he's less confident than in the previous meeting, Powell still expects inflation to move down "over the course of the year."

Meanwhile, BMO also noted, in Canada, BoC Governor Macklem and Senior Deputy Governor Rogers will appear before the Standing Senate Committee on Banking, Commerce, and the Economy at 4:15 p.m. ET.

Elsewhere, Wells Fargo Investment Institute has published Market Commentary in which it said the better growth in the United States that seems to be resulting from easier financial conditions has allowed it to raise its GDP estimates this year to 2.5%. Next year, WFII continues to see accommodative conditions and a Fed that has modestly cut interest rates to lead to 2.1% growth. And this better growth should also result in higher earnings for corporations, it added.

WFII said: "While the inflationary decline has stalled in recent months, we expect to see disinflation as the economy slows further this year, which should spark a pickup in economic growth from those segments that will benefit from easier and cheaper bank credit. Even if inflation should tick higher again as economic growth broadens and becomes more consistent across segments, we expect an equal broadening of opportunities in equity markets."