Photo: Contributed

TORONTO — North American stock markets dropped Thursday despite efforts by the chairman of the Federal Reserve to reassure investors that interest rates aren’t about to increase.

The S&P/TSX composite index closed down 194.95 points at 18,125.72, despite strength in the energy sector as oil reached its highest level in more than two years.

In New York, the Dow Jones industrial average was down 345.95 points at 30,924.14 and the S&P 500 index lost 51.25 points at 3,768.47.

The Nasdaq composite fell 274.28 points, or 2.1%, to 12,723.47, the lowest level since early January.

Market jitters followed as the 10-year U.S. bond yields again increased above 1.5%.

Investors are worried that the U.S. vaccine rollout will spur a quicker economic recovery and prompt the central bank to hike interest rates sooner than they expect.

Fed chairman Jerome Powell tried to tame expectations by insisting Thursday that rates won’t rise and quantitative easing won’t taper off until the U.S. reaches his maximum employment goals.

“The market was not reassured by that because after the speech the market continued to go down,” said Pierre Cleroux, chief economist for the Business Development Bank of Canada, adding he thought Powell’s message was clear.

Canadian oil producers got a lift with shares of MEG Energy Corp. surging 9.8 per cent while Vermilion Energy Inc. rose 5.6 per cent and Cenovus Energy Inc. gained 4.9 per cent.

Despite the oil price increase, the Canadian dollar slipped, trading for 79.13 cents US compared with 79.17 cents US on Wednesday.