Major North American stock indexes ended higher on Thursday as investors assessed the latest batch of economic data and as a surge in Treasury yields stalled ahead of a key U.S. inflation report.
Investors were also watching developments in Washington to see whether U.S. lawmakers could avert a government shutdown.
The recent move in Treasury yields to 16-year highs has loomed over the stock market, which has pulled back after the Federal Reserve last week signaled a hawkish long-term outlook for interest rates.
The benchmark 10-year Treasury yield paused at around 4.6%, bringing “relief,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Co. Canada’s 10-year yield Thursday eased 3 basis points to 4.065% after earlier touching its highest level since December 2007 at 4.165%.
“Markets in general the last few days have been really, really choppy,” Stucky said. “A little bit of a counter trend rally is to be expected after three or four pretty sharply negative days.”
Data Thursday showed the U.S. economy maintained a fairly solid pace of growth in the second quarter. Separate readings showed initial jobless claims rose slightly last week and a higher-than-expected fall in contracts to buy existing homes in August.
Investors were looking ahead to Friday’s U.S. personal consumption expenditures price index for the latest view on inflation.
“This is the most important U.S. datapoint this week, and there is a growing anticipation that it won’t run hot,” said Kristina Hooper, chief global market strategist at Invesco.
In Washington, the Democratic-led U.S. Senate forged ahead with a bipartisan stopgap funding bill aimed at averting a fourth partial government shutdown in a decade. The House of Representatives prepared to vote on partisan Republican spending bills with no chance of becoming law.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 154.76 points, or 0.8%, at 19,590.74, after posting on Wednesday its lowest closing level in three months.
“It’s been a challenging month for equities, with factors such as rising yields, sticky inflation, continued economic uncertainty and a looming U.S. government shutdown casting its shadow on financial markets,” said Brandon Michael, a senior investment analyst at ABC Funds. “I think the market is waiting for yields to stabilize. Until they stabilize, markets should remain volatile. But it does seem the market has reached a short-term trough just based on the technical indicators.”
The Toronto market’s heavily-weighted financials sector rose 1.1%, technology added 1.3% and the materials group, which includes precious and base metals miners and fertilizer companies, ended 1.2% higher.
Gains for energy were more restrained. The sector added 0.1% as oil settled 2.1% lower at $91.71 a barrel, giving back some of its recent advance.
Canadian economic data is also awaited on Friday. It is expected to show GDP rebounding 0.1% in July after declining 0.2% in June.
On Wall Street, the Dow Jones Industrial Average rose 116.07 points, or 0.35%, to 33,666.34, the S&P 500 gained 25.19 points, or 0.59%, to 4,299.70 and the Nasdaq Composite gained 108.43 points, or 0.83%, to 13,201.28.
Among S&P 500 sectors, the communication services group gained 1.2%, while materials rose 1%. The rate-sensitive utilities sector sank 2.2%, continuing its recent slide.
The S&P 500 has pulled back over 6% since late July, but remains up about 12% for 2023.
In company news, Micron Technology shares dropped 4.4% after the chip company forecast a bigger loss than analysts had expected.
Accenture shares slumped 4.3% after the IT services firm forecast full-year earnings and first-quarter revenue below Wall Street targets.
Advancing issues outnumbered decliners by a 2.2-to-1 ratio on the NYSE. There were 75 new highs and 337 new lows on the NYSE. On the Nasdaq, advancing issues outnumbered decliners by a 1.5-to-1 ratio. The Nasdaq recorded 39 new highs and 303 new lows. About 10.7 billion shares changed hands in U.S. exchanges, compared with the 10.3 billion daily average over the last 20 sessions.
Reuters, Globe staff