U.S. and Canadian stocks ended a volatile session higher Thursday, with indexes in both countries briefly losing ground late in the session after U.S. President Donald Trump repeated his threat that the United States will impose a 25% tariff on imports from Mexico and Canada.
The Trump warning also immediately sent the loonie tumbling below 69 cents US, to a new multiyear low of 68.52 US cents. It soon retraced about half that move and was last quoted at 68.94 cents.
Worries about Trump’s possible tariffs and their impact on the U.S. economy and inflation have kept investors on edge. Trump indicated that his 25 per cent tariffs on Canada and Mexico are coming on Saturday, but he’s still considering whether to include oil from those countries as part of his import taxes.
“Until we understand what tariff policies, what fiscal policies are going to go into play, it’s going to be very difficult for the market to find a trajectory that is sustainable,” said Oliver Pursche, senior vice president, advisor for Wealthspire Advisors in Westport, Connecticut. “We’re probably going to see increased volatility, but it’ll be range-bound.”
All of the S&P 500 sectors rose except for technology on Thursday, with communication services and financials registering record closing highs.
Tesla shares gained 2.9% and were among the biggest boosts to the S&P 500. CEO Elon Musk vowed to launch long-awaited cheaper models in the first half of 2025 and start testing an autonomous ride-hailing service in June. The comments overshadowed its quarterly results that fell short of expectations.
Shares of Microsoft dropped 6.2% after the company forecast disappointing growth in its cloud computing business.
The Dow Jones Industrial Average rose 168.61 points, or 0.38%, to 44,882.13, the S&P 500 gained 31.86 points, or 0.53%, to 6,071.17, and the Nasdaq Composite added 49.43 points, or 0.25%, at 19,681.75.
Despite the tariff threat, the Canadian market outperformed, as heavily weighted materials stocks rallied along with the gold price. The S&P/TSX composite index closed up 334.95 points, or 1.31%, at 25,808.25, a record high.
“Everybody is in a bit of a holding pattern right now to see what is going to transpire around tariffs,” said Ilana Schonwetter, investment adviser and portfolio manager at BlueShore Financial.
“Tariffs will, without a doubt, have a negative impact on the Canadian economy, which should cause [the Bank of Canada] to lower rates, but with the loonie weakening even further, that of course creates inflationary pressure on everything that is imported into Canada from the United States,” she said. “So it’s a very, very difficult balancing act between ensuring economic strength without causing inflation to start to tick up.”
Also helping the S&P 500 was Meta, whose shares gained 1.6% after the company beat Wall Street’s fourth-quarter revenue estimates but said current-quarter sales may not meet forecasts. IBM shares jumped 13% in its biggest daily percentage gain since 1999 after the company surpassed fourth-quarter profit expectations.
Investors also took in comments from the CEOs of Meta and Microsoft defending their heavy investments in artificial intelligence, days after Chinese startup DeepSeek unveiled a breakthrough in cheap AI models that rattled Wall Street and triggered a sell-off in AI-linked stocks.
Friday brings the U.S. personal consumption expenditures price index report for December.
The Federal Reserve on Wednesday kept interest rates steady and Fed Chair Jerome Powell said inflation and jobs data would determine when another easing would come.
So far this reporting period, more than 70% of S&P 500 company earnings reports on the final quarter of 2024 have beaten analysts’ expectations, LSEG data showed.
Among other outlooks, United Parcel Service forecast 2025 revenue below expectations. Its shares fell 14.1% and weighed on the Dow Jones Transportation Average.
After the closing bell, Apple shares fell about 1%. The company beat analysts’ quarterly profit estimates on Thursday, but posted weak iPhone sales and China revenue for the holiday quarter.
Advancing issues outnumbered decliners by a 4.1-to-1 ratio on the NYSE. There were 254 new highs and 52 new lows on the NYSE. On the Nasdaq, 2,938 stocks rose and 1,470 fell as advancing issues outnumbered decliners by a 2-to-1 ratio. Volume on U.S. exchanges was 13.79 billion shares, compared with the 15.4 billion average for the full session over the last 20 trading days.
Reuters, The Canadian Press, Globe staff