Canada’s main stock index rose on Wednesday to more than two-month highs as investors grew more optimistic about the economic outlook, with heavily-weighted financials among the sectors that gained ground.
The S&P/TSX composite index ended up 114.6 points, or 0.6%, at 20,491.17, its highest closing level since May 15.
The Dow Jones Industrial Average and S&P 500 index also rose, helped by gains for some bank stocks after reporting corporate earnings.
“It doesn’t look like we will see a major credit crunch anytime soon and that could mean good news for the recovery that takes hold next year,” Edward Moya, senior market analyst at OANDA, said in a note.
The stock market rally has come amid signs of easing price pressures in developed economies, including Canada. Data on Tuesday showed that Canadian inflation eased in June to a 27-month low of 2.8%. Credit markets are pricing in only about a 20% chance of a further Bank of Canada rate hike at its next policy meeting in September.
The TSX’s financials sector rose 0.7%, while interest-rate sensitive sectors such as real estate and utilities also advanced. Real estate rose 1.2% and utilities was up 0.9%.
On Wall Street, the Dow Jones Industrial Average registered its eighth straight day of gains as investors gauged the latest round of corporate earnings, but a decline in Microsoft held the Nasdaq near the unchanged mark. It was the Dow’s longest winning streak since September 2019.
Bank stocks extended their rally, with the S&P 500 bank index advancing 1.70%, gaining for a third straight session and for the eighth time in the past nine.
Goldman Sachs rose 0.97% after reporting a three-year low in profit but CEO David Solomon made upbeat comments about signs of a recovery in investment banking. That echoed comments from other big banks on Tuesday.
“Right now we are getting through the raft of companies that are smart and years ago had moved over to more reliable fee-based income and that is what people are kind of working through their heads,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“Banks are giving you the tenor of what is happening in business.”
Citizens Financial jumped 6.39% and M&T Bank rose 2.48% after both beat Wall Street estimates for second-quarter profit. US Bancorp reversed earlier losses to climb 6.46% higher as the Minneapolis-based lender posted a 28% jump in quarterly net interest income.
The KBW regional bank index rose 2.90% for its third straight daily advance to close at its highest level since March 10.
The Dow Jones Industrial Average rose 109.28 points, or 0.31%, to 35,061.21, the S&P 500 gained 10.74 points, or 0.24%, to 4,565.72 and the Nasdaq Composite added 4.38 points, or 0.03%, to 14,358.02.
Gains on the Nasdaq were held in check, weighed down by a 1.23% fall in Microsoft after a report that Apple was working on artificial intelligence (AI) offerings. Nvidia, was off 0.88% and Alphabet, down 1.40%, also lost ground.
Carvana surged 40.20% after the used-car retailer struck a deal with most of its term bondholders to cut its outstanding debt by more than $1 billion.
Tesla was up 0.46% after the closing bell in choppy trading after the electric vehicle maker reported its gross margin fell in the second quarter from the previous three months.
Also after the close, Netflix lost 4.48% after the streaming video company handily beat Wall Street’s earnings forecasts.
Second-quarter earnings are expected to have declined 8.2%, Refinitiv data showed, more than the 5.7% fall expected at the start of the month.
AT&T ended the session up 8.48% after the telecom company said it did not intend to immediately remove lead cables from Lake Tahoe pending further analysis. Peer Verizon added 5.27%.
Volume on U.S. exchanges was 10.98 billion shares, compared with the 10.57 billion average for the full session over the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a 2.05-to-1 ratio; on Nasdaq, a 1.32-to-1 ratio favored advancers. The S&P 500 posted 40 new 52-week highs and no new lows; the Nasdaq Composite recorded 144 new highs and 60 new lows.
Reuters, Globe staff