04:30 PM EDT, 06/12/2024 (MT Newswires) -- Canada's main stock market, the Toronto Stock Exchange, closed with a gain on Wednesday, but surrendered some early strength after the Federal Reserve dashed hopes for a near-term cut to interest rates despite the second-straight monthly drop in the Consumer Price Index.

The S&P/TSX Composite Index closed up 74.21 points to 21,961.55 points, falling off session highs of 22,127.72 on futile optimism U.S. rate hikes could be on the way following the soft CPI data..

The biggest advancers on the day were Health Care, up 1.4%, and Information Technology, up 1.3%, while the biggest decliners on the day were Battery Metals and Energy, down 2.3% and 0.7% respectively.

Early optimism came after the U.S. Bureau of Labor Statistics said its Consumer Price Index (CPI) rose 3.3% annualized in May, down from a 3.4% pace in April and under expectations for a 3.4% rise according to Marketwatch. Core CPI, which excludes volatile food and energy, was up 0.2% from April, down from 0.3% in the prior month and under expectations for a 0.3% rise.

The data, coming as the Federal Open Market Committee held the second day of its two-day meet, raised hopes the central bank could lower interest rates as soon as September. However the group, who left interest rates unchanged as expected, indicated it is unlikely to lower rates until December as its awaits further data showing inflation is nearing its 2% target.

"We don't think it will be appropriate to loosen policy policy until we are more confident on inflation," Fed chair Jerome Powell told a post meeting press conference.

"The Fed is still planning to cut rates in 2024. While the median Fed dot only points to 25 basis points in cuts this year (vs 75 bps in March), investors were concerned whether the Fed was still prepared to cut at all. The upturn in inflation over the first few months of 2024 has caused the Fed to proceed more cautiously. There are 8 members of the FOMC that think 50 bps in cuts will be warranted by end-2024, while 7 are expecting 25 bps, and 4 foresee no cuts at all. This is a big departure from just three months ago, when most members were expecting three cuts this year," James Orlando, senior economist at TD Economics noted.

Gold traded higher mid-afternoon on Wednesday following the report that U.S. inflation rose less than expected last month, sending the dollar and treasury yields sharply lower. Gold for August delivery was last seen up US$10.90 to US$2,337.50 per ounce.

West Texas Intermediate (WTI) crude oil closed higher on Wednesday despite a lower demand forecast from the International Energy Agency and rising inventories after U.S. consumer prices rose less than expected last month. WTI crude for July delivery closed up US$0.60 to settle at US$78.50 per barrel, while August Brent crude, the global benchmark, was last seen up US$0.61 to US$82.53.