U.S. and Canadian major indexes marked record closing highs with modest gains on Thursday, largely thanks to support from the technology sector, while investors cautiously monitored private labour market data on the second day of a U.S. government shutdown.
The benchmark S&P 500 index rose very slightly, with its valuation already at its highest level since 2020, while the Nasdaq, up 0.4%, was the biggest gainer on the day, with help from heavyweight technology companies including AI chip leader Nvidia, Apple and Broadcom.
With no official government data available because of the shutdown, investors were monitoring information from other sources. A report from global outplacement firm Challenger, Gray & Christmas said U.S. employers announced fewer layoffs in September but that hiring plans so far this year were the lowest since 2009. This followed the previous day’s weaker-than-expected ADP National Employment Report.
The lackluster jobs data so far has led traders to bet widely that the Federal Reserve will cut interest rates two more times this year, including a cut at the end of October. However, the Labor Department had to delay its September nonfarm payroll report because of the government shutdown.
While the shutdown was not a shock and investors have been soothed by the knowledge that such closures have typically not hurt the market in the past, it has still caused worries.
“What we’re seeing in the market right now is really a playing out between the fundamentals and the political noise,” said Philip Petursson, chief investment strategist at IG Wealth Management. “Some investors have been making the mistake, thinking that what’s going on in the United States with the shutdown and everything else would have a bigger impact on the market but the reality is what matters are profits.”
“This is a profit-driven market. That’s why we continue to hit new highs on the TSX, on the S&P 500, on other indexes around the world,” Petursson said. “We believe that this is a culmination of a renewed economic cycle and a renewed market cycle.”
The Dow Jones Industrial Average rose 78.62 points, or 0.17%, to 46,519.72. The S&P 500 gained 4.15 points, or 0.06%, to 6,715.35 and the Nasdaq Composite gained 88.89 points, or 0.39%, to 22,844.05.
The gains marked two closing highs in a row for the S&P 500 and the Dow, while the Nasdaq narrowly missed a record close on Wednesday.
Earlier in the session, the S&P and the Nasdaq indexes had hit intraday record highs. The S&P 500’s forward price-to-earnings ratio has climbed to 23.1.
Toronto’s S&P/TSX composite index ended up 52.92 points, or 0.2%, at 30,160.59, notching its fifth straight day of gains and eclipsing Wednesday’s record closing high.
The TSX technology sector rose 1%, with Constellation Software Inc ending 1.8% higher. Consumer discretionary advanced 1.7%, helped by a gain of 2.3% for autoparts supplier Magna International Inc.
Energy was a drag, falling 0.7%, as the price of oil settled 2.1% lower at US$60.48 a barrel on oversupply concerns ahead of a meeting of the OPEC+ group over the weekend.
The materials group, which includes fertilizer companies and metal mining shares, was down 0.4%.
On Wall Street, the tech sector finished up 0.5% and was the biggest boost to the S&P 500 with a lot of help from chip stocks. The broader semiconductor index closed up 1.9% and also registered a record closing high.
Materials was the biggest percentage gainer among the benchmark’s 11 major industry sectors, adding 1%. Energy was the biggest percentage loser of the group, falling 1%.
Consumer discretionary, while not the biggest percentage loser, was the biggest drag on the S&P 500 due largely to a selloff in shares of Tesla, which ended down 5% for its biggest one-day percentage loss since late July. The electric vehicle maker gave up early gains after a strong quarterly deliveries report, because some analysts flagged risks to sales in the upcoming quarters due to the withdrawal of the US$7,500 federal tax credit in the U.S.
Shares of credit bureaus Equifax and TransUnion fell 8.5% and 10.6%, respectively, after FICO launched a program that could allow mortgage lenders to gain access to credit scores without relying on the bureaus. FICO shares surged almost 18% after the news.
Occidental Petroleum said it would sell its petrochemical division to Warren Buffett’s Berkshire Hathaway for $9.7 billion, sending shares of the oil and gas producer down 7.3%.
Advancing issues outnumbered decliners by a 1.16-to-1 ratio on the NYSE where there were 530 new highs and 93 new lows. On the Nasdaq, 2,706 stocks rose and 1,971 fell as advancing issues outnumbered decliners by a 1.37-to-1 ratio. The S&P 500 posted 37 new 52-week highs and 11 new lows while the Nasdaq Composite recorded 140 new highs and 67 new lows. On U.S. exchanges, 18.77 billion shares changed hands compared with the 18.83 billion 20-day moving average.
Reuters, Globe staff