Canada’s main stock index pulled back on Friday from a record high as investors took stock of recent gains, but the move was limited as domestic jobs data fueled optimism about the economy.
The S&P/TSX Composite index ended down 166.16 points, or 0.5 per cent, at 31,311.41, after posting a record closing high on Thursday. For the week, the index lost 0.2 per cent as a dip in gold prices offset stronger-than-expected bank earnings.
“I think the overarching theme is still positivity but we have some consolidation that’s going on into the end of the year ... with some lightening up where profits have been made, getting ready for what we’re seeing in 2026,” said Philip Petursson, chief investment strategist at IG Wealth Management.
“The big thing is that the Canadian economy is in better shape than what people thought just, say, a month or two ago.
Canada’s unemployment rate once again defied expectations and fell to a 16-month low in November as the economy added 53,600 jobs, marking the third-straight month of robust job gains. Analysts had forecast a decrease of 5,000 jobs.
“The data cements expectations that the Bank of Canada will remain on hold next week and likely is done with its easing cycle,” said Angelo Kourkafas, senior global investment strategist at Edward Jones.
Investors expect the BoC to leave its benchmark interest rate unchanged at a three-year low of 2.25 per cent next Wednesday and have begun to bet on a move to interest rate hikes in 2026.
The materials group, which includes metal mining shares, fell 1.1 per cent, with shares of Orla Mining down 11.1 per cent. Fairfax Financial Holdings said it had sold 25 million shares of the miner.
Technology was down 0.8 per cent, weighed by a 1.7 per cent decline for the shares of e-commerce company Shopify Inc.
Industrials also ended 0.8 per cent lower as railroad shares lost ground.
U.S. stocks closed out the trading week with slight gains on Friday as the latest flurry of economic data kept elevated expectations for a Federal Reserve interest rate cut next week intact.
In the wake of the 43-day government shutdown, market participants have been digesting delayed economic data as the backlog slowly dwindles, while also looking to secondary indicators to gauge the health of the economy.
Delayed data from the Commerce Department showed consumer spending, which accounts for more than two-thirds of economic activity, rose 0.3 per cent in September to match the estimate of economists polled by Reuters, after a downwardly revised 0.5 per cent gain in August.
In addition, the Personal Consumption Expenditures Price Index increased 0.3 per cent after gaining 0.3 per cent in August, the Bureau of Economic Analysis said. In the 12 months through September, the PCE Price Index advanced 2.8 per cent after rising 2.7 per cent in August. Both were in line with forecasts.
A separate report from the University of Michigan’s Surveys of Consumers showed consumer sentiment improved in early December to 53.3, topping the 52 forecast. Markets were pricing in an 87.2 per cent chance of a 25-basis-point rate cut at this month’s Fed meeting, according to CME’s FedWatch Tool, although the meeting is expected to have a large number of dissenting voters over concerns about persistent inflation.
Expectations for a cut were below 30 per cent two weeks ago until several Fed officials voiced support for a rate reduction.
“Investors are looking ahead to next week. We get a little bit more in the way of economic data ... but all eyes will be on the Fed meeting on Wednesday, and right now there’s a very high likelihood the Fed will cut rates by another quarter point,” said Michael Sheldon, vice president and senior portfolio manager at Washington Trust Wealth Management, in New Haven, Connecticut.
“Then, the question is what they say following the meeting and whether they give any hints about future policy.”
The Dow Jones Industrial Average rose 104.05 points, or 0.22 per cent, to 47,954.99, the S&P 500 gained 13.28 points, or 0.19 per cent, to 6,870.40 and the Nasdaq Composite gained 72.99 points, or 0.31 per cent, to 23,578.13.
For the week, the S&P 500 gained 0.31 per cent, the Nasdaq rose 0.91 per cent, and the Dow climbed 0.5 per cent. All three indexes recorded a second straight weekly advance.
Shares of Warner Bros Discovery climbed 6.3 per cent after Netflix agreed to buy its TV, film studios, and streaming division for $72 billion, ending a weeks-long bidding war. Netflix shares closed 2.9 per cent lower, while Paramount Skydance , one of the other bidders for Warner Bros, tumbled 9.8 per cent.
Communication services was the best-performing of the 11 S&P 500 sectors with a gain of nearly 1 per cent as it set a record closing high.
The S&P 500 healthcare index declined after a group of vaccine advisers scrapped a longstanding recommendation that all U.S. children receive the hepatitis B shot at birth.
The benchmark S&P 500 is about 1 per cent shy of a record high, but small-cap stocks have rallied strongly over the past two weeks with the Russell 2000 up 0.8 per cent this week after a 5.5 per cent jump last week as they are seen as likely to benefit strongly from rate cuts.
“All the low-quality, unprofitable, highly levered businesses have been high beta, high volatility, that’s been the best performing stocks,” said Jed Ellerbroek, portfolio manager at Argent Capital Management in St. Louis.
“A lot of that is just due to rates coming down a fair amount and expectations for rates to come down further.” Ulta Beauty surged 12.7 per cent after the beauty retailer raised its annual sales and profit forecasts.
Declining issues outnumbered advancers by a 1.01-to-1 ratio on the NYSE and by a 1.22-to-1 ratio on the Nasdaq. The S&P 500 posted 33 new 52-week highs and seven new lows while the Nasdaq Composite recorded 116 new highs and 61 new lows.
Volume on U.S. exchanges was 16.2 billion shares, compared with the 17.72 billion average for the full session over the last 20 trading days.
Reuters