Wall Street ended sharply higher Monday as investors focused on Tuesday’s midterm elections that will determine control of Congress, while shares of Meta Platforms jumped on a report of job cuts at the Facebook parent. The TSX also closed higher, although the advance trailed the major U.S. indexes.
Republicans are favoured to win a majority in the House of Representatives in the elections, with the Senate rated a toss-up by nonpartisan forecasters. Republicans could use a majority in either chamber to hinder Democratic President Joe Biden’s agenda.
“The likelihood that the Republicans take the House or the Senate is pretty high, therefore guaranteeing some form of gridlock over the next couple of years. That would probably take tax hikes off the table, and any sort of big spending potentially perceived as inflationary off the table,” said Ross Mayfield, an investment strategy analyst at Baird.
Meta Platforms Inc jumped over 6% following a report that the company was planning to begin large-scale layoffs this week. The stock has slumped more than 70% so far this year.
Recently beaten-down shares of Microsoft and Google-parent Alphabet each rallied more than 2% and contributed heavily to the S&P 500′s gain for the session.
Focus this week will also be on U.S. consumer prices data for October, due out on Thursday, for clues about how much the U.S. Federal Reserve’s rapid interest rate hikes are helping cool down the economy.
Four Fed policymakers on Friday indicated they would consider a smaller rate hike at their next policy meeting, despite new data showing another month of robust job gains and only small signs of progress in lowering inflation.
Traders are divided about whether the Fed will raise interest rates by 50 basis points or 75 basis points at the U.S. central bank’s meeting in December.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 96.10 points, or 0.5%, at 19,545.91, its highest closing level since Sept. 19. The advance was led by the technology and industrial sectors.
“The earnings from North American companies have been very good despite a crazy macro-economic environment,” said Barry Schwartz, a portfolio manager at Baskin Financial Services. “The earnings have held up. That’s why the stock market hasn’t really plummeted.”
The TSX has fallen 7.9% since the beginning of 2022 but that is much less than some other major global benchmarks due in part to its heavy weighting in energy shares.
Higher oil prices have bolstered the earnings of energy companies this year.
The energy group rose 0.3% on Monday, while technology added 1.3% and industrials ended nearly 1% higher.
Among individual names, Summit Industrial Income REIT jumped 25.5% after Singapore’s sovereign wealth fund, GIC, and Canada’s Dream Industrial REIT said they were buying the company.
Mining company SilverCrest Metals climbed 12.4% after announcing it had reached a commercial production milestone at its Las Chispas mine.
But industrial equipment marketplace Ritchie Bros Auctioneers Inc was a drag. Its shares tumbled 17.7% after the company said it would buy U.S.-based IAA Inc in a cash-and-stock deal.
Cronos Group shares ended 10.1% lower after the weed company reported a bigger-than-expected loss, hit by a weakening Canadian dollar and lower cannabis flower sales in Canada.
The S&P 500 climbed 0.96% to end the session at 3,806.80 points.
The Nasdaq gained 0.85% to 10,564.52 points, while the Dow Jones Industrial Average rose 1.31% to 32,827.00 points.
Of the 11 S&P 500 sector indexes, eight rose, led by communication services which was up 1.83%, followed by a 1.73% gain in energy.
All the three major U.S. indexes have slumped this year, with the tech-heavy Nasdaq down 33% due to worries that aggressive monetary policy tightening could cripple the U.S. economy.
Digital World Acquisition Corp surged 66% after former U.S. President Donald Trump hinted at another White House bid. The blank-check firm has agreed to take social-media startup Trump Media & Technology Group Corp public.
Walgreens Boots Alliance Inc gained 4.1% after VillageMD, a primary care provider backed by the pharmacy chain, said it will acquire Summit Health in a deal valued at nearly $9 billion.
Advancing issues outnumbered falling ones within the S&P 500 by a 2.8-to-one ratio. The S&P 500 posted 18 new highs and 15 new lows; the Nasdaq recorded 93 new highs and 221 new lows. Volume on U.S. exchanges was relatively light, with 10.5 billion shares traded, compared to an average of 11.8 billion shares over the previous 20 sessions.
Reuters, Globe staff
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