The S&P 500 and Nasdaq eked out record closing highs on Tuesday, with tech-related shares extending recent gains as investors awaited further jobs data. The S&P/TSX Composite Index ended higher, but not quite enough to capture another record closing high, with gains for resource shares offsetting disappointing results from Bank of Nova Scotia. The Dow finished slightly lower.
Marketwatchers also digested reassuring comments from Federal Reserve policymakers. Two policymakers said they see inflation heading down to the U.S. central bank’s 2% target and that the job market is “solid.”
They stayed away from signaling whether they would support another interest rate cut later this month. On Monday, Fed Governor Christopher Waller said he was inclined “at present” to support another rate cut this month.
Investors will pay close attention to the U.S. monthly employment report on Friday. They also are keen to see other U.S. data this week, including a November reading of private payrolls and the Institute for Supply Management’s services report. The Canadian jobs report for November will also be released on Friday.
A report on Tuesday showed U.S. job openings increased solidly in October while layoffs dropped by the most in 1-1/2 years.
Financial markets expect a roughly 72% chance of a 25-basis-point rate cut at the Fed’s Dec. 17-18 policy meeting, CME Group’s FedWatch tool showed.
Shares of Amazon rose 1.3%. The company announced a new slate of artificial intelligence platforms, known as foundation models, at its annual AWS conference.
The Dow Jones Industrial Average fell 76.47 points, or 0.17%, to 44,705.53, the S&P 500 gained 2.73 points, or 0.05%, to 6,049.88 and the Nasdaq Composite gained 76.96 points, or 0.40%, to 19,480.91.
The S&P 500 advanced 5.7% in November as former U.S. President Donald Trump recaptured the White House in the Nov. 5 election and his Republican Party swept both houses of Congress. The index is up roughly 27% for the year to date.
The TSX on Tuesday ended up 45.40 points, or 0.2%, at 25,635.73, stopping just short of the record closing high it posted on Friday.
In November, the TSX added 6.2%, its biggest monthly gain in one year.
“The post-election relief rally continues,” said Matt Skipp, president of SW8 Asset Management. “Optimism about a more business friendly environment in the United States is driving markets ever higher.”
Canada sends about 75% of its exports to the United States, including oil, which settled 2.7% higher at US$69.94 a barrel as Israel threatened to attack the Lebanese state if its truce with Hezbollah collapses.
The TSX energy sector added 0.5% and the materials group, which includes fertilizer companies and metal mining shares, was up 2.7%. Copper prices climbed 1.8% and gold edged higher.
Bank of Nova Scotia shares fell 3.4% as the bank reported fourth-quarter earnings below analysts’ expectations, warning about modest economic growth in key international markets and drawing investors’ attention to credit woes as consumers struggle to pay back high-interest loans.
“Interest rates are too high in Canada and they’ve got to come down. Everybody is loaded with debt and it hurts,” Skipp said. The Bank of Canada has lowered its benchmark interest rate by one and a quarter percentage points since June to 3.75% but borrowing costs are still above the 2.75% rate the central bank estimates for the neutral setting - the level that neither restricts nor stimulates the economy.
The heavily weighted TSX financials sector was down 0.5%, while industrials ended 0.4% lower as railroad shares fell.
U.S.-listed shares of South Korean companies declined, with iShares MSCI South Korea ETF easing. South Korean President Yoon Suk Yeol said he would move to lift a martial law declaration he had imposed just hours before.
Meanwhile, shares of Tesla eased on Wall Street after data showed the automaker’s sales of China-made electric vehicles fell 4.3% year-on-year to 78,856 in November.
Reuters, Globe staff