U.S. and Canadian stock indexes closed higher on Monday, as investors awaited crucial policy meetings later this week at the Federal Reserve and the Bank of Canada. The TSX, as well as the S&P 500 and the Nasdaq, notched record highs.
The Federal Open Market Committee meeting on Tuesday and Wednesday looms large over sentiment this week, with market participants widely expecting a 25-basis-point reduction following recent economic data signaling labour market weakness.
“The market is counting on sort of a goldilocks scenario where the employment market is just weak enough to prompt the Federal Reserve to start a rate cutting series, not just one, without disrupting overall growth,” said Carol Schleif, chief investment officer at BMO Family Office. “I think the markets will be disappointed if the Fed doesn’t give some hint that they intend to continue rate cuts.”
Traders on Monday were pricing in a 96% chance of a 25-basis-point cut at this week’s meeting.
The Bank of Canada also will make its latest decision on interest rates on Wednesday. Traders are pricing in about the same probability that it, too, will announce a 25 basis point cut.
The Dow Jones Industrial Average rose 49.23 points, or 0.11%, to 45,883.45, the S&P 500 gained 30.99 points, or 0.47%, to 6,615.28 and the Nasdaq Composite gained 207.65 points, or 0.94%, to 22,348.75.
Tesla shares climbed 3.6% after regulatory filings revealed CEO Elon Musk had acquired nearly US$1 billion worth of the electric vehicle maker’s stock on Friday. And Google parent Alphabet hit a record high and raced past US$3 trillion in market capitalization.
Tesla’s gains boosted the S&P 500 consumer discretionary sector 1.1% to its highest level in nearly nine months. Meanwhile, Alphabet helped lift the communication services sector up 2.33%.
Nvidia slipped 0.04% after China’s market regulator said it will continue an investigation into the AI chip leader after preliminary findings showed it had violated the country’s anti-monopoly law.
The S&P/TSX composite index ended up 147.20 points, or 0.5%, at 29,431.02, eclipsing last Thursday’s record closing high.
The TSX energy sector rose 0.8% as the price of oil settled 1.1% higher at US$63.36 a barrel after Ukrainian drone attacks on Russian refineries. Uranium shares were among the biggest advancers, with Cameco Corp jumping 9.9%.
Canadian oil sands producer MEG Energy urged shareholders to reject the sweetened takeover bid from its majority stakeholder Strathcona Resources and reaffirmed support for sale to Cenovus Energy. Cenvous rose 1.9%, while Strathcona was down 1.8% and MEG ended barely changed.
Technology was up 0.8% and heavily weighted financials added 0.5%.
Stateside, declines in McDonald’s and Procter & Gamble Co weighed on the Dow. CoreWeave jumped 7.6% after the data center operator signed a deal with Nvidia that guarantees that the chipmaker will purchase any residual cloud capacity not sold to customers. The deal’s initial value is US$6.3 billion. Kerrisdale Capital disclosed a short position on CoreWeave.
On the Nasdaq, advancing issues outnumbered decliners by a 1.2-to-1 ratio. Advancing issues outnumbered decliners by a 1.67-to-1 ratio on the NYSE.
The S&P 500 posted 23 new 52-week highs and 11 new lows while the Nasdaq Composite recorded 117 new highs and 66 new lows. Volume on U.S. exchanges was 17.68 billion shares, compared with the 16.2 billion average for the full session over the last 20 trading days.
Reuters, Globe staff