The Nasdaq closed higher on Wednesday as investors switched back to technology stocks and away from economically sensitive sectors as they weighed COVID-19 vaccine progress against a virus surge and likely timing for a economic rebound. The TSX also closed with solid gains, reaching its highest levels since late August, with tech stocks also leading the advance.
While the S&P 500 advanced as well, the blue-chip Dow ended the session slightly in the red.
A return to technology-focused market leaders, which thrived during COVID shutdowns but sold off earlier in the week as investors pivoted to economically-sensitive cyclical stocks, put the Nasdaq out front.
“This week we saw a bit of rotation from growth back to value,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “That we’re back to tech has to do with its oversold nature and there’s a sense of safety in heavily capitalized technology companies.”
Hopes for an end to the global health crisis gained strength after Pfizer Inc’s announcement on Monday that its COVID-19 vaccine candidate, developed with BioNTech, showed a 90% success rate in preventing infection during trials.
The news stoked investors' risk appetite across the board, and sent oil prices higher, building on two straight sessions of sharp gains.
But that optimism could be waning. The Dow Jones Transportation index, seen by many as a barometer of broader economic health, ended the session sharply lower.
“The news about the success of the vaccine trial is incredibly important,” Keator added. “But investors should be mindful that while there is light at the end of the tunnel we still have a ways to go.”
While on Tuesday the yield of benchmark U.S. 10-year Treasuries reached the highest level since March, on Wednesday the U.S. bond market was closed in observance of Veterans Day.
The S&P/TSX Composite Index closed up 158.77 points, or 0.96%, at 16,774.14. The advance was broad, with the materials sector the only notable decliner, with tech stocks rallying 3.69%. Shopify jumped 7.17%, although that only recouped a portion of the losses it suffered earlier this week.
Great Canadian Gaming jumped 34% after U.S. private equity firm Apollo Global Management Inc. announced a $2.1-billion acquisition of the company that rescues the casino operator from its financial struggles. However, Great Canadian’s second-largest shareholder heavily criticized the deal, saying it is being sold too cheaply to a foreign player during a crisis, and pledged to vote against it.
Auto parts maker Linamar was also a major gainer on the TSX, rallying 16% after late Tuesday reporting better-than-expected quarterly results and announcing a doubling of its dividend.
The Dow Jones Industrial Average fell 23.29 points, or 0.08%, to 29,397.63, the S&P 500 gained 27.13 points, or 0.77%, to 3,572.66 and the Nasdaq Composite added 232.58 points, or 2.01%, to 11,786.43.
The momentum of vaccine hopes and encouraging comments from European Central Bank chief Christine Lagarde boosted European shares higher for the third straight session, offsetting worries over spiking coronavirus infections.
The pan-European STOXX 600 index rose 1.08% and MSCI’s gauge of stocks across the globe gained 0.77%.
Emerging market stocks lost 0.13%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.2% higher, while Japan’s Nikkei rose 1.78%.
Crude oil prices edged higher, extending their rally and building on gains sparked by the notion of reviving demand and a steeper-than-expected decline in U.S. inventories.
U.S. crude rose 0.22% to settle at $41.45 per barrel and Brent settled at $43.80 per barrel, up 0.44% on the day.
The U.S. dollar gained ground against a basket of currencies and the safe-haven yen weakened on hopes that a medical solution to the pandemic could jump start economic growth.
The dollar index rose 0.28%, with the euro down 0.3% to $1.1779.
Gold prices slid, hurt by a stronger dollar and increased risk appetite which drew investors away from the safe-haven metal.
Spot gold dropped 0.7% to $1,864.02 an ounce.
Read more: Stocks that saw action on Wednesday - and why
Reuters, with files from Darcy Keith of the Globe and Mail
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