Canada’s main stock index rose to a new record high on Tuesday, led by gains for resource and technology shares, as investor exuberance continued to underpin the market ahead of a Bank of Canada policy decision and other key events this week.
The S&P/TSX composite index ended up 134.46 points, or 0.5%, at 27,539.88, eclipsing Friday’s record closing high.
“Optimism still seems to be pervading the market,” said Michael Sprung, president at Sprung Investment Management. “I think the market has risen on euphoria and I don’t know what it will take to break that euphoria, but I think at some point people are going to have to look hard at valuations and decide what intrinsic value really is and that could cause some setback going forward.”
The mood on Wall Street was more cautious Tuesday. U.S. stocks closed lower as the S&P 500 and Nasdaq retreated from record highs after some disappointing corporate earnings.
The Federal Reserve and the Bank of Canada are due to make policy decisions on Wednesday, while a deadline for Canada to reach a trade deal with the U.S., or face a 35% tariff on its goods, is set for Friday.
The BoC is likely to keep its benchmark rate unchanged at 2.75% for the third straight meeting, economists and market analysts predict, as firm core inflation and robust job growth offset trade uncertainty. The Fed is also expected to make no change to its key lending rate.
Technology rose 2.2% on the TSX, with shares of Celestica climbing 16.9% after the electronics firm reported stronger-than-expected second-quarter results.
Real estate in Toronto was up 1.7% as bond yields fell. The Canadian 10-year yield eased 4.5 basis points to 3.484%.
The materials group, which includes metal mining shares, added 1.2% as the price of gold rose.
Energy also ended higher, rising 1%, as the price of oil settled up 3.8% at US$69.21 a barrel.
Air Canada was a drag, with its shares tumbling 12.3% after the company reported lower second-quarter profit.
In the U.S., a host of Dow components reported earnings, with UnitedHealth, Boeing and Merck all closing lower after their quarterly results.
Health insurer UnitedHealth stumbled 7.5% and was the biggest drag on the Dow after a disappointing profit forecast, while Boeing declined 4.4% despite reporting a smaller second-quarter loss. Merck dipped 1.7% after the drugmaker reported quarterly results and said it was extending its pause on shipments of HPV vaccine Gardasil to China until at least the end of 2025 due to persistent weakness in demand.
“Earnings have been a bit of a mix. Economic data has been somewhat mixed too, but not enough to move the needle in terms of the Fed,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
Earnings from megacaps Meta, Microsoft, Amazon and Apple are due this week and are likely to have a strong influence on market direction due to their large market weightings.
The Dow Jones Industrial Average fell 204.57 points, or 0.46%, to 44,632.99, the S&P 500 lost 18.91 points, or 0.30%, to 6,370.86 and the Nasdaq Composite lost 80.29 points, or 0.38%, to 21,098.29.
United Parcel Service shares plunged 10.6% as the package delivery company posted earnings and again declined to issue annual revenue and margin forecasts, deepening concerns that U.S. President Donald Trump’s continually changing trade policy is weighing on the company.
That helped drag down the Dow Jones Transport Average by 2.3% for its biggest daily percentage decline since May 21. Likewise, Whirlpool plummeted 13.4% after the home appliances maker slashed its annual earnings forecast and dividend, citing pressure from a pull-forward in imports by rivals ahead of Trump’s tariffs. Procter & Gamble shares shed 0.3%, as the maker of consumer goods such as dish soap and toilet paper forecast annual results below estimates and said it would raise prices on some products to offset the tariff impact.
Nearly 200 S&P 500 components have reported earnings and are posting results 6.4% above expectations, according to LSEG data, compared with an average of 6.3% over the last four quarters.
On the economic front, U.S. consumer confidence in July increased more than expected to 97.2. In June, U.S. job openings and hiring, or JOLTS data, had decreased, pointing to a further slowdown in labor market activity.
The JOLTS report was the first in a string of data on the U.S. labour market this week, culminating in Friday’s government payrolls report.
Remarks by Fed Chair Jerome Powell after the Fed decision Wednesday will be closely monitored to gauge the timing of any potential rate cuts.
Key negotiations between the U.S. and China completed their second day in Stockholm as the world’s two leading economies aim to resolve their trade conflict, with Trump saying he was told by Treasury Secretary Scott Bessent that the latter had a very good meeting with Chinese officials.
Declining issues outnumbered advancers by a 1.03-to-1 ratio on the NYSE and by a 2.08-to-1 ratio on the Nasdaq. The S&P 500 posted 32 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 76 new highs and 83 new lows. Volume on U.S. exchanges was 18.01 billion shares, compared with the 17.89 billion average for the full session over the last 20 trading days.
Reuters, Globe staff