Canada’s main stock index climbed to its highest level in more than two weeks on Wednesday, as gains for energy and financial shares offset a decline in the technology sector. All three Wall Street benchmarks also closed higher, a fourth straight session of gains after a turbulent start to the year, aided by upbeat earnings from Google-parent Alphabet and chipmaker Advanced Micro Devices.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 42.44 points, or 0.2%, at 21,362.36, also its fourth straight advance, and the highest closing level since Jan. 17.
After falling 0.6% in January, the benchmark equity index has started off this month on a positive note as investors grew less fearful that central banks would hike interest rates aggressively and focus turned to corporate earnings.
“We can see people put money back into the market and we could be setting up for a bit of a bounce,” said Gregory Taylor, portfolio manager at Purpose Investments.
Heavily-weighted financial shares rose 0.8%, while the energy group ended 0.9% higher as oil prices held near seven-year highs after major producers stuck to planned moderate output increases.
Bank of Canada Governor Tiff Macklem said there was uncertainty about how quickly inflation would come back down due to the unique nature of the COVID-19 pandemic, which has helped drive up prices.
Technology shares were a drag in Toronto, falling 2.2%. It included a 10% decline for Shopify Inc, the stock with the third largest market capitalization on the Toronto market.
Dye & Durham Ltd was also among the biggest decliners, falling 14.5% after the company reported quarterly results.
In U.S. markets, Alphabet rose 7.5% after reporting record quarterly sales on Tuesday and announcing plans to undertake a 20-to-one stock split - a move that could make it more appealing to retail investors.
But sentiment for tech suddenly turned sour in the post market Wednesday. Facebook owner Meta Platforms Inc shares plunged 20% in extended trading as the social media company missed on Wall Street earnings estimates and posted a weaker-than-expected forecast.
Meta said it faced hits from Apple Inc’s privacy changes to its operating system, which have made it harder for brands to target and measure their ads on Facebook and Instagram, and from macroeconomic issues like supply-chain disruptions.
Last month, the tech-heavy Nasdaq fell as much as 19% from its all-time high in November as investors dumped highly valued growth stocks on prospects of faster-than-expected rate hikes.
Traders are betting on five rate hikes this year after hawkish comments from the U.S. Federal Reserve in January.
“There’s a huge portion of the tech market, and the growth market, that is commanding fairly extreme multiples, which probably needs a little air taken out of the tires,” said Jason Pride, chief investment officer of private wealth at Glenmede, adding such a move was “healthy”.
Tech earnings provide an opportunity for this to happen, with ripple effects being felt by peers.
Advanced Micro Devices Inc climbed 5.1% after the company on Tuesday forecast 2022 revenue above expectations, following strong quarterly demand for its semiconductors, despite global supply snags.
The positive sentiment extended to other chipmakers including Nvidia Corp, Qualcomm Inc and Micron Technology Inc, which advanced between 2.5% and 6.3%.
However, PayPal Holdings Inc slumped 24.6% after it forecast first-quarter revenue and profit well below expectations.
Other financial technology and payments firms were dragged down as a result, with Block Inc, Affirm Holdings Inc and SoFi Technologies falling between 8.4% and 10.6%.
Overall, the only major S&P sector that ended lower was consumer discretionary, which dipped 0.5%. Communication services led gainers, on the back of Alphabet’s performance. It was also aided by Match Group Inc , which rose 5.3% as investors picked up the Tinder owner on a belief that the Omicron variant would not impact its business as much as previously feared.
Only consumer discretionary was lower, down xx%.
The Dow Jones Industrial Average rose 224.09 points, or 0.63%, to 35,629.33, the S&P 500 gained 42.84 points, or 0.94%, to 4,589.38 and the Nasdaq Composite added 71.54 points, or 0.5%, to 14,417.55.
Markets in 2022 have been choppy, as investors seek to position themselves for rising rates to tackle inflation, as well as lingering pandemic influences on the economy and geopolitical tension in Europe.
“The markets are trying to piece all this together,” said Pride. “It almost feels like a ‘deer-in-headlights’ effect right now, where there are too many cross-currents to try and triangulate quickly.”
He added the market is likely to bounce around for the immediate future, as investors digest these various inputs.
An unexpected decline in private payrolls on Wednesday helped keep U.S. Treasury yields stable as investors weighed its potential impact on Friday’s broader jobs report.
Banks including JP Morgan Chase & Co, Citigroup Inc and Bank of America Corp lost ground, falling between 0.1% and 0.8%.
Volume on U.S. exchanges was 11.06 billion shares, compared with the 12.43 billion average for the full session over the last 20 trading days.
The S&P 500 posted 27 new 52-week highs and two new lows; the Nasdaq Composite recorded 48 new highs and 67 new lows.
Reuters, Globe staff
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