Markets show muted reaction to announcement from Fed

The reaction in the markets, though positive, was muted. The TSE 300 composite index closed up 65.79 points at 10,231.30. While the growth was relatively widespread — 579 issues advanced while 496 issues declined — the volume was extremely light at 138 million shares traded.

In the sub-indices, nine of 14 were up, led by precious metals and consumer products. Industrial products, conglomerates and transportation were also up. Oil and gas stocks led the way on the down side.

Barrick Gold and Placer Dome both helped boost the gold sub-index, while paper producer Abitibi-Consolidated Inc. was up 2.18% on news that its shuttered Gaspesia paper mill will be reopened.

Among the tech stocks, CGI was up 10% after an earnings warning knocked $4.40 off the price last week. It ended the day at $10.70. Nortel added another $1.55 to close at $102.10. Lehman Brothers included the networking giant on its list of 10 “uncommon value” stocks, released in the U.S. today.

The CDNX closed up 27.41 points at 3,457.31 while the loonie closed at US67.58¢

In the U.S., market reaction was similarly muted. The Dow Jones industrial average finished the day up slightly at 10,527.79, a gain of 23.33 points.

The NASDAQ composite showed a bit more life, gaining 81.38 points, or 2.1%, to finish at 3,940.34. In the past, the NASDAQ has followed up Fed meetings with a rally that turns into a sell-off a few weeks later. Check back in a couple weeks as to whether the pattern holds.

The S&P 500 was also up, though slightly. It ended the day at 1,454.82, a gain of 4.27 points.

As for individual movers, tech plays Cedant, BEA Systems and Gemstar were all up. They also appeared on the Lehman Brothers list.

WorldCom was also up 11.7% even though the European Community is going to block the telecom giant’s merger with Sprint. The rise came after a Salomon Smith Barney report recommended the stock, calling the scuttled merger “unfortunate.”

As for the contents of the policy report released following the FOMC meeting, Greenspan and Co. were in classic form. In typically obscure form, the FOMC wrote that, “Recent data suggest that the expansion of aggregate demand may be moderating toward a pace closer to the rate of growth of the economy’s potential to produce.”

That is to say, the economy is slowing.