Indexes in Toronto and the U.S. initially surged on news that the Fed had no immediate plans to turn the tap off on its $85-billion-a-month bond buyback program.
But by the end of the day, the S&P/TSX composite index was ahead just 10.07 points at 12,752.50. The Canadian dollar fell 0.98 of a cent to 96.41 cents US.
On Wall Street, the Dow Jones industrials index was down 80.41 points at 15,307.17. The S&P 500 dropped 13.81 points to 1,655.35 and the Nasdaq fell 38.82 points to 3,463.30.
The indexes had hit records as day earlier after two Fed presidents hinted that the U.S. central bank should be cautious with pulling back on quantitative easing.
On Wednesday, in testimony before the Congress, Bernanke said scaling back, or even stopping the $85-billion-a-month bond buyback program would be a bad idea because the U.S. job market remains too weak.
Yet when pressed, he said that it could happen as early as U.S. Labor Day.
"I don't think (Bernanke's) quite comfortable that ending QE (quantitative easing) is going to go on without a hitch, meaning that the economy will continue to move up and the markets will handle it well," said Ian Nakamoto, a portfolio manager at MacDougall, MacDougall and MacTier.
"I don't think he wants any abrupt change in the direction of unemployment... and I don't think he wants to put any impediment on the economy from moving up."
Meanwhile, minutes of the Fed's last monetary meeting from April 30-May 1 released following Bernanke's speech showed that some officials had considered slowing down the asset purchases as early as June.
But a number of other members voiced concerns that the program might need to be expanded if inflation continued to weaken.
Investors had been worried that the Fed would begin pulling back its monetary stimulus since recent data showed that outlooks for housing and jobs in the U.S. were rosier than expected. Quantitative easing has boosted liquidity in financial markets over the past few years.
The move has been replicated in some other countries, although not in Canada, and has resulted in stock indexes flying upwards despite a patchy recovery from recession in many parts of the world.
Over the past few weeks, a number of the world's main markets, such as the Dow Jones and Germany's DAX have recorded a string of all-time highs, while others such as Japan's Nikkei and Britain's FTSE 100 have hit multi-year highs.
Nakamoto called Bernanke a "student of history" who knows not to pull stimulus out too soon or run the risk of slowing the economic recovery altogether, like Japan in the 1990s.
In the meantime, he predicted the markets will continue to enjoy the long runs it's seen, particularly in the past few weeks.
"The path of least resistance is up," said Nakamoto. "It's got to hit something where the market is not expecting before we got a shock to the market and tumble back. Having said that, it might pause for a while."
Meanwhile, the U.S. National Association of Realtors said sales of previously occupied homes rose to a seasonally adjusted annual rate of 4.97 million in April, up from 4.94 million in March and the highest level in 3 1/2 years. Home sales have risen 9.7 per cent in the past 12 months.
Statistics Canada reported that retail sales were flat in March, holding at $39.5 billion. After removing the effects of price changes, particularly lower gasoline prices, retail sales in volume terms rose 0.7 per cent.
The largest increase in sales was a 3.1 per cent rise at clothing and clothing accessories stores, while sales at motor vehicle and parts dealers rose 0.7 per cent for a third consecutive monthly gain.
On the commodities front, June bullion fell $10.20 to US$1,367.40 an ounce as the gold sector on the Toronto Stock Exchange climbed more than two per cent. Shares in Aurizon Mines (TSX:ARZ) were up 4.17 per cent, or 18 cents, to C$4.50, while shares in Iamgold Corp. (TSX:IMG) surged 3.56 per cent, or 18 cents, to $5.23.
The July crude contract lost $1.90 to US$94.28 a barrel as the energy sector was fell 0.13 per cent. Oil giant Suncor Energy (TSX:SU) saw its shares dip by one per cent, or 33 cents, to C$32.50.
July copper climbed four cents to US$3.38 a pound, while the metals and mining sector was up by 1.99 per cent. Rio Alto Mining shares were up 2.33 per cent, or seven cents, to C$3.08, while HudBay Minerals (TSX:HBM) saw its shares jump 2.64 per cent, or 21 cents, to $8.21.
Sears Canada Inc. (TSX:SCC) shares ended the day up 0.64 per cent, or six cents, at $9.41 even as the national retailer reported a $31.2-million loss as well as lower revenue in its latest quarter.
The loss amounted to 31 cents per share and contrasted with a year-earlier profit of $93.1 million or 91 cents per share, when its bottom line was boosted by an unusual gain. Excluding unusual items, however, Sears would have had a loss of $44.9 million in last year's first quarter.
Hewlett-Packard (NYSE:HPO), the world's largest personal computer maker, reported after markets closed that it earned US$1.1 billion, or 55 cents per share, in its fiscal second quarter. That was down 32 per cent from US$1.6 billion, or 80 cents per share, last year as year-over-year revenue fell for the seventh consecutive quarter. But in initial aftermarket trading, the stock was up almost 14 per cent, or $2.95, at US$$24.18Suggest a correction