Canada’s main stock index rallied by the most in nearly six weeks on Tuesday, with resource stocks leading the gains as commodity prices rose and the U.S. left out energy and critical minerals from a list of proposed new tariffs on Canadian goods.
Wall Street’s main indexes also rose, with a recovery in semiconductor shares helping to shift the focus away from the latest developments in the Middle East, while investors awaited major tech earnings for clues on the future of the AI trade.
The S&P/TSX Composite Index ended up 408.76 points, or 1.2%, at 35,369.08, after three straight days of declines.
Canadian Prime Minister Mark Carney said he and U.S. President Donald Trump agreed to intensify trade negotiations after speaking on Tuesday, but warned he would consider all options if the tariffs Trump threatened on Monday go ahead.
“It does help the Canadian investment landscape the fact that, one, there is still only a narrow set of exports that are targeted and, two, that there are carve outs for the energy and other commodities that we ship to the United States on a usual basis,” said Bipan Rai, head of ETF and alternatives strategy at BMO Global Asset Management.
The materials group, which includes metal mining shares, jumped 5% as gold and copper prices climbed. Hudbay Minerals Inc was among the biggest advancers, with its shares gaining 10.5%.
Energy added 2.2%. The price of oil settled 2% higher at US$84.91 a barrel on worries that energy supply disruptions could worsen in the Middle East due to more attacks between the U.S. and Iran and a threatened naval blockade of Saudi Arabia by Yemen’s Houthis.
Among the biggest Canadian movers, shares of electronic equipment company Celestica Inc climbed 11.1%, which helped lift technology by 0.8%.
Four of the 10 major TSX sectors ended lower, including consumer staples, which was down 0.7%.
On Wall Street, the Dow Jones Industrial Average rose 385.38 points, or 0.74%, to 52,224.64, the S&P 500 gained 65.92 points, or 0.89%, to 7,509.20 and the Nasdaq Composite gained 329.13 points, or 1.29%, to 25,837.21.
A rebound in recently battered semiconductor stocks provided huge support, with the Philadelphia SE Semiconductor Index finishing with a 5.2% rally in its second consecutive advance after ending Friday more than 20% below its late-June record high.
“Investors are really buying back in to the semis ahead of earnings because they have fear of missing out (FOMO), that these companies could report outsized earnings beats and increase their outlooks and they don’t own as much as they did before the most recent pullback,” said Lindsey Bell, chief investment strategist at 248 Ventures in Charlotte, North Carolina.
But Bell cautioned that when stocks rally sharply ahead of earnings, “it makes it more difficult for them to run in response to earnings.”
“The numbers are going to be really good, but the stocks are also priced for perfection,” she said.
The chip index dipped last week as investors grew concerned about high valuations and hefty investments on artificial intelligence. But even after that drop, it is still up nearly 75% year-to-date.
Among the S&P 500’s 11 major industry sectors, nine advanced, with a 2.35% rally in information technology leading the pack. The consumer staples index was the biggest loser, finishing down 1%, followed by communications services, which lost 0.85%.
Leading the S&P 500 were Sandisk, up 14.3%, Western Digital, which rose 12.5%, and Micron Technology, with a 12.2% advance.
Among individual U.S. stocks, 3M shares rallied 7.3% after the industrial giant lifted its full-year profit forecast.
Hasbro stock jumped 8.8% after it raised annual revenue and profit forecasts, betting on demand for its digital gaming and “Magic: The Gathering” products.
Danaher shares sank 11% and were the biggest loser in the S&P 500, after the life sciences firm trimmed its core revenue growth outlook and reported weaker-than-expected revenue in its biotechnology business.
Shares of MSCI, the benchmark’s second-biggest loser, tumbled 10% after the index provider raised its full-year operating expense forecast despite better-than-expected quarterly revenue.
And Genuine Parts shares dropped 2.7% after the auto parts distributor lowered its full-year profit outlook.
Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the New York Stock Exchange, where there were 113 new highs and 116 new lows. On the Nasdaq, 2,995 stocks rose and 1,814 fell as advancing issues outnumbered decliners by a 1.65-to-1 ratio. The S&P 500 posted 10 new 52-week highs and 7 new lows.
On U.S. exchanges, volume was light, with 16.14 billion shares changing hands compared with the 19.56 billion moving average for the last 20 sessions.
In currency markets, the Canadian dollar weakened to a one-week low against the greenback as the threat of additional U.S. tariffs on Canadian goods led to investors reducing bets on Bank of Canada interest rate hikes this year.
The loonie was trading 0.2 per cent lower at 1.4104 per U.S. dollar, or 70.90 U.S. cents, marking its weakest level since last Tuesday.
The swap market was pricing in 13 basis points of interest rate hikes from the Bank of Canada by December. That’s down from 16.5 basis points before the tariff announcement and down from 18 basis points in advance of Monday’s softer-than-expected Canadian inflation data.
Canadian government bond yields moved lower across the curve. The 2-year was down 2.7 basis points at 2.812 per cent, while it fell 6.9 basis points further below the equivalent U.S. rate to a gap of 144.5 basis points, which is the widest gap since May 2025.
Reuters, Globe staff