U.S. stocks ended higher on Tuesday, helped by gains in financial shares as investors awaited key inflation reports and the start of second-quarter earnings in the coming days. The TSX also closed higher, led by a rally in energy stocks.
Investors are looking for further clues on whether price pressures are abating and if the Federal Reserve is nearing the end of its interest rate hiking cycle.
U.S. consumer price data is due on Wednesday, while a U.S. producer prices report is due on Thursday.
Results from JPMorgan and other big banks later this week are expected to unofficially kick off the start of the second-quarter reporting period. Wall Street banks are expected to report higher profits for the second quarter as rising interest payments offset a reduction in dealmaking.
“It’s nice to see the market broadening out here ahead of earnings,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“We’ve got a lot of data that’s going to be coming in here ... and expectations for the third quarter are also a concern in terms of any guidance companies might be giving on earnings calls.”
The S&P 500 is up about 15% for the year so far, with technology up roughly 40% in that period.
Canadian investors were also anxiously awaiting the Bank of Canada’s verdict on monetary policy on Wednesday. The central bank is widely expected to deliver another 25-basis-point hike after data last week hinted at a robust jobs market.
“We think that tomorrow we’re going to see a rate hike,” said Angelo Kourkafas, senior investment strategist at Edward Jones. “But investors likely realize that the BoC is nearing the end of its tightening campaign, so potentially, tomorrow’s rate hike could be the last one of the cycle,” he said.
Wall Street brokerages J.P.Morgan and Citigroup expect the BoC to hike its lending rate by 25 bps to 5% on Wednesday, but Bank of America in a report Tuesday said it expected the Canadian central bank to hold rates steady. Bond markets are pricing in about a 70% probability of a BoC hike.
The S&P/TSX Composite Index closed up 56.11 points, or 0.28%, to 19,878.56.
Energy shares climbed 1.3%. Oil prices jumped on Tuesday, settling up about 2% in New York, boosted by a falling U.S. dollar, hopes for higher demand in the developing world and supply cuts by the world’s biggest oil exporters.
Shares of TransAlta Corp rose 1.2%%, recovering from a steep decline earlier in the session after the Canadian electric utility firm said it will buy the rest of the stake it does not own in TransAlta Renewables Inc, in a cash-and-stock deal valued at C$1.38 billion.
Shares of TransAlta Renewables soared 18.4% to the top of the TSX.
The Toronto market’s technology sector rallied 0.7%, with Shopify advancing 1.7% after it announced a partnership with U.S. streaming device maker Roku.
According to preliminary data, the S&P 500 gained 29.75 points, or 0.66%, to end at 4,439.28 points, while the Nasdaq Composite gained 75.22 points, or 0.55%, to 13,760.70. The Dow Jones Industrial Average rose 303.11 points, or 0.89%, to 34,247.51.
Among the S&P 500′s biggest gainers on the day, shares of videogame maker Activision Blizzard jumped after a U.S. judge ruled that Microsoft may proceed with its planned acquisition of Activision.
Salesforce shares rose after the cloud services firm said it would increase prices of some of its cloud and marketing tools, a first in seven years.
Also, Amazon.com shares edged up with its “Prime Day” 48-hour shopping event going on this week.
Reuters, Globe staff