Canadian dollar plunges 1 cent as investors reconsider the Fed's message

After shooting up yesterday on news the Fed may move more slowly than expected on interest rates, the markets reversed course Thursday as they seemed to reconsider the message from the U.S. central bank.

Oil prices slid, the Canadian dollar as down and stocks moved mainly lower as investors came to terms with the fact that higher rates are coming — at some point later this year.

On Wednesday, the Fed dropped its language that it could “afford to be patient” on raising rates and indicated no rise would come in April, but could not be more specific on timing. Instead it said that when it moved would be dependent on economic data that comes out over the next few months.

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That will leave markets reacting negatively to every sign the U.S. is strengthening, while lacklustre results give stocks new impetus.

The loonie gave back a chunk of the 1 ¼ cent rise it enjoyed yesterday, closing at 78.54, down one cent.

Toronto S&P/TSX composite index declined 88 points to 14,873, under pressure from energy stocks and lower oil prices.

The Dow has a slightly different composition today, after Apple, world's most valuable company, joined the basket of 30 stocks that comprise the Dow industrial composite index.

Apple replaces AT&T, which was dropped from the index at the end of Wednesday’s session.

Because Apple’s stock prices is so high — at $128 US — any move in its value could have a strong impact on the Dow. The S&P index reflects a broader representation with 500 listed companies.

Oil also reversed course on Thursday, amid warnings from industry titan T. Boone Pickens that U.S. producers must stop pumping so much oil if they hope to ease the oil glut.

The West Texas Intermediate contract fell 86 cents to $43.80 US a barrel, while Brent crude, the international contract traded in London declined $1.53 to $54.38.