TORONTO — Canada's main stock index gained almost one per cent on Tuesday, boosted by financial and technology stocks, while U.S. stock markets also climbed higher, led by a 2.4-per-cent gain on the Nasdaq.
“Last week brought the storm cloud, and this week, we're getting back to a little bit more sunshine, with markets continuing to recover,” said Craig Fehr, head of Investment Strategy for Edward Jones.
Markets were spooked last week by fears that the rally so far this year has been overblown and that a recession is around the corner, said Fehr.
But so far this week those concerns have largely reversed, he said, with the pendulum swinging back toward focusing on the fight against inflation and the interest rate cuts expected soon.
“That's been the source of optimism for nearly the entirety of 2024 and I think we're seeing some of that optimism come back into the fore today,” said Fehr.
The S&P/TSX composite index closed up 219.25 points at 22,618.18.
In New York, the Dow Jones industrial average was up 408.63 points, or one per cent, at 39,765.64. The S&P 500 index was up 90.04 points, or 1.7 per cent — its third best day this year — at 5,434.43, while the Nasdaq composite was up 407 points at 17,187.61.
This week brings a buffet of data to either soothe investors’ fears or further stoke worries, said Fehr. Tuesday’s report on wholesale inflation did the former, showing continued cooling in July.
The report is another positive sign that inflation is moderating at a sustainable pace, said Fehr.
Wednesday will bring the consumer inflation report, while retail sales come later in the week.
Markets are looking for just enough softness to support rate cuts from the U.S. Federal Reserve, said Fehr, but without the economy weakening too much.
“I think today's data helps support that narrative,” he said.
Though last week some market watchers started calling for an outsized interest rate cut in the fall, Fehr still thinks a 25-basis-point cut is the most likely scenario.
The Canadian dollar traded for 72.87 cents US compared with 72.79 cents US on Monday.
The September crude oil contract was down US$1.71 at US$78.35 per barrel and the September natural gas contract was down four cents at US$2.15 per mmBTU.
The December gold contract was up US$3.80 at US$2,507.80 an ounce and the September copper contract was down two cents at US$4.05 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Aug. 13, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
