Canada’s main stock index rose to a new record high on Friday, led by technology shares, as bond yields fell in anticipation of another outsized interest rate cut from the Bank of Canada. The Nasdaq and the S&P 500 also ended the week at record highs.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 11.76 points, or 0.05%, at 25,691.8, moving past the record closing high it posted on Thursday. For the week, the index was up 0.22%, its fifth straight weekly advance.
Investors assessed U.S. and Canadian employment data for November. Canada’s unemployment rate rose to 6.8%, a near-eight-year high outside of the pandemic era, while U.S. job growth surged after being severely hindered by hurricanes and strikes.
“Even though we’re getting some vibes of recession in Canada, the U.S. jobs number was very robust and the Canadian number is a worry for another day,” said Barry Schwartz, chief investment officer at Baskin Wealth Management. “Rate cuts at least make stocks look that more attractive.”
Investors raised bets on a half-percentage-point interest rate cut from the BoC on Dec. 11 after the bank cut by that magnitude in October, while the Canadian 10-year yield touched its lowest level in two months at 2.978%.
Lower long-term rates increase the value to investors of the future cash flows that companies in high-growth sectors such as technology are expected to produce.
The technology index rose 1.78%, with shares of e-commerce company Shopify Inc up 4.67%.
Shares of Bank of Montreal were up 4.72% after Scotiabank raised its target price on the stock. Heavily weighted financials ended up 0.39%.
BRP Inc was a standout. Its shares rose 6.9% after the power sports products company reported third-quarter earnings that beat estimates.
Declines for energy, however, helped limit the TSX’s advance. The sector fell 2% as fear of a supply glut weighed on oil prices.
The Dow Jones Industrial Average fell 123.19 points, or 0.28%, to 44,642.52, the S&P 500 gained 15.16 points, or 0.25%, to 6,090.27 and the Nasdaq Composite gained 159.05 points, or 0.81%, to 19,859.77.
The S&P 500 registered its 57th record closing high for 2024, while the Nasdaq Composite posted its 36th record high close for the year.
The Dow finished lower, as a 5.1% drop in UnitedHealth Group shares weighed on the index.
For the week, the Nasdaq gained 3.3%, the S&P 500 rose about 1% and the Dow fell 0.6%.
The S&P 500 consumer discretionary index Friday rose 2.4% to hit an all-time closing high. It led gains among sectors, boosted by Lululemon.
Shares of Lululemon Athletica jumped 15.9% after the sportswear maker increased full-year forecasts.
Also in the consumer discretionary space, shares of cosmetics retailer Ulta Beauty advanced 9% after the company raised its annual profit forecast.
The U.S. Labor Department report showed job growth surged in November, but an increase in the unemployment rate to 4.2% pointed to an easing labor market. Following the data, U.S. rate futures were pricing in roughly a 90% chance the Fed will lower interest rates by 25 basis points at its Dec. 17-18 policy meeting, according to LSEG calculations which previously saw just a 72% chance.
The Fed has lowered rates by 75 basis points since September, when it launched its easing cycle.
Shares of health insurance companies including UnitedHealth extended declines from the previous session, two days after Brian Thompson, CEO of UnitedHealth’s health insurance unit, was fatally shot outside a Manhattan hotel. The shooter remained at large and his motive has not been determined. The death sparked comments on social media over frustrations with the U.S. health insurance system.
Among other stock moves, shares of Facebook-owner Meta Platforms were up 2.4% after a U.S. appeals court upheld a law requiring China-based ByteDance to divest its popular short video app TikTok by early next year or face a ban.
The Cboe Volatility Index, Wall Street’s fear gauge, ended down 0.77 points at 12.77 in its lowest finish since mid-July.
Declining issues outnumbered advancers by a 1.01-to-1 ratio on the NYSE. There were 354 new highs and 98 new lows on the NYSE. On the Nasdaq, 2,610 stocks rose and 1,678 fell as advancing issues outnumbered decliners by a 1.56-to-1 ratio. Volume on U.S. exchanges was 12.99 billion shares, compared with the 14.5 billion average for the full session over the last 20 trading days.
Reuters, Globe staff