Canada’s main stock index rose to another record high on Thursday, as technology and financial shares notched gains ahead of U.S. and Canadian employment data that will guide expectations for interest rate cuts.
The S&P/TSX composite index ended up 164.53 points, or 0.6%, at 28,915.89, eclipsing the record closing high it posted on Wednesday. It was the seventh straight day of gains, the longest daily winning streak since May.
U.S. indexes also saw solid gains, with the S&P 500 reaching a new record high.
“The TSX won’t quit,” said Barry Schwartz, chief investment officer at Baskin Wealth Management. “It’s like every day it’s hitting a record high and it seems to have the right mix for this kind of market.”
Financials, energy and materials account for 64% of the TSX’s weighting. Powered in large part by a rally in gold and mining stocks, the materials sector is up more than 50% since the start of the year.
U.S. and Canadian employment data are set for release on Friday, with economists forecasting modest job gains that could leave the door open to the BoC and the Federal Reserve resuming their easing campaigns.
The Fed has cut interest rates much less than the Bank of Canada in the current cycle. A move to more significant cuts by the U.S. central bank over the coming months could be a catalyst for the next move higher in stocks.
The TSX technology sector rose 2.1%, led by a 7% gain for the shares of Descartes Systems Group Inc after the supply chain technology provider beat quarterly revenue estimates.
Consumer discretionary was up 1% and financials added 0.7%, while real estate gained 1.1% as long-term borrowing costs fell. The Canadian 10-year bond yield touched a two-month low at 3.340%.
The mood on Wall Street was upbeat as labour market data did not change expectations for an interest rate cut by the Federal Reserve.
Also boosting the market were shares of Broadcom, Amazon and Meta Platforms. Chip company Broadcom, considered a major artificial intelligence player, closed up 1.2% just before releasing its quarterly results. The stock edged higher in after-hours trading, when Broadcom forecast fourth-quarter revenue above Wall Street estimates.
Amazon.com finished up 4.3%. Shares of other consumer discretionary companies also rose sharply, with the sector gaining 2.3% on the day.
JetBlue Airways said it will partner with Amazon subsidiary Project Kuiper, a low Earth orbit satellite broadband internet network, to improve its onboard Wi-Fi. Meta Platforms rose 1.6%.
Earlier on Thursday, data showed that the number of Americans filing new applications for unemployment benefits increased more than expected last week, while hiring by private employers slowed in August, further evidence that labor market conditions were softening.
But investors are especially keen to see the U.S. monthly jobs report due on Friday.
“The labor market data we’re going to get - payrolls - tomorrow I don’t see really changing anything significantly because (Fed Chair Jerome) Powell has effectively already told us we’re getting a cut unless it’s really, really out of bounds,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments in Charlotte, North Carolina.
The Dow Jones Industrial Average rose 350.06 points, or 0.77%, to 45,621.29, the S&P 500 gained 53.82 points, or 0.83%, to 6,502.08 and the Nasdaq Composite gained 209.97 points, or 0.98%, to 21,707.69.
Investors are pricing in a 95% probability of a 25 basis-point cut, CME’s FedWatch Tool showed. The move was largely expected after July’s bleak payrolls figures and Powell’s dovish comments.
Bucking the day’s trend, Salesforce shares fell 4.9% after the company forecast third-quarter revenue below Wall Street estimates on Wednesday, signaling lagging monetization for its AI agent platform.
September is historically a weak month for stocks, with the S&P 500 losing 1.5% on average since 2000, according to LSEG data.
While AI-linked companies have driven market gains in recent years, their momentum slowed last month. Last week, shares of AI leader Nvidia fell after Sino-U.S. trade uncertainties prompted the company to exclude potential China sales from its quarterly forecast.
Among other gainers in the consumer space, American Eagle Outfitters shares jumped 38% after the apparel company forecast third-quarter comparable sales above estimates on Wednesday.
Advancing issues outnumbered decliners by a 2.79-to-1 ratio on the NYSE. There were 303 new highs and 61 new lows on the NYSE. On the Nasdaq, 2,741 stocks rose and 1,878 fell as advancing issues outnumbered decliners by a 1.46-to-1 ratio. Volume on U.S. exchanges was 14.68 billion shares, compared with the 16.07 billion average for the full session over the last 20 trading days.
Reuters, Globe staff