Major North American indexes posted record-high closes on Thursday, a day after the U.S. Federal Reserve and Bank of Canada delivered quarter-point interest rate cuts.
Nvidia deciding to build a stake in Intel helped to propel the gains. Intel clinched its biggest daily gain since October 1987, jumping 22.8% after Nvidia said it would invest US$5 billion in the struggling U.S. chipmaker.
Nvidia rose 3.5%, recovering losses from Wednesday when a report said Chinese tech firms might stop buying its chips. The moves boosted a broader semiconductor index up 3.6%, and also lifted the tech-heavy Nasdaq and the S&P 500 technology sector up 1.36%. Seven of the 11 S&P 500 sectors gained.
Meanwhile, the small-cap Russell 2000 index notched its first record high close since November, at 2,466 points. Small-cap companies are likely to perform better in a low interest-rate environment.
On Wednesday, Fed Chair Jerome Powell emphasized that the softening jobs market was a priority and indicated more reductions could follow at upcoming policy meetings.
“We are looking for support for economic growth and justification of stretched valuations and the prospect of lower interest rates helps that,” said Sam Stovall, chief investment strategist at CFRA Research.
New data showed that the number of Americans filing new applications for unemployment benefits fell last week, but the labour market has softened as both demand for and supply of workers have diminished.
The U.S. rate cut is expected to add to Wall Street’s recent rally, boosted by monetary policy easing hopes and a revival of AI-linked stock trading. Investors are pricing in about 44.2 basis points in cuts by end-2025, data compiled by LSEG showed.
Investors expect just one more rate cut from the BoC by year-end.
The Dow Jones Industrial Average rose 124.10 points, or 0.27%, to 46,142.42, the S&P 500 gained 31.61 points, or 0.48%, to 6,631.96 and the Nasdaq Composite gained 209.40 points, or 0.94%, to 22,470.73.
The biggest S&P sector decliners were consumer staples and consumer discretionary stocks.
The S&P/TSX composite index ended up 131.87 points, or 0.5%, at 29,453.53, eclipsing Monday’s record closing high.
The TSX’s 12-month forward price-earnings ratio, a closely watched stock valuation metric, has climbed to 16.45, its highest level since May 2021, data from LSEG Datastream showed.
“We’re dealing with markets that are fairly highly valued,” said Michael Sprung, president at Sprung Investment Management. “Given the high valuations and the investor exuberance that seems to be apparent in the market, I think this is a time for caution.”
The TSX technology sector rose 1.7%, with shares of e-commerce company Shopify Inc up 3%.
Financials, which account for 33% of the index’s weighting, added 0.5%.
Four of the 10 major sectors ended lower, including energy. Energy was down 0.2% as the price of oil settled 0.75% lower at US$63.57 a barrel.
The proposed Anglo American-Teck Resources merger has revived long-standing ambitions to share infrastructure at two major mines in northern Chile, but analysts say the plan could face hurdles to gain buy-in from Swiss miner and trader Glencore. Shares of Teck ended 0.3% lower.
Among U.S. stocks, CrowdStrike gained 12.8% after at least nine brokerages raised their price target on the stock. Shares of Darden Restaurants fell 7.7% after the Olive Garden parent reported weak quarterly results.
Advancing issues outnumbered decliners by a 1.87-to-1 ratio on the NYSE, and by a 2.5-to-1 ratio on the Nasdaq. The S&P 500 posted 31 new 52-week highs and eight new lows while the Nasdaq Composite recorded 156 new highs and 42 new lows. Volume on U.S. exchanges was 19.30 billion shares, compared with the 16.67 billion average for the full session over the last 20 trading days.
Reuters, Globe staff