The S&P/TSX Composite Index, S&P 500 and Nasdaq closed higher on Monday, recovering some losses as investors anticipated quarterly earnings from AI leader Nvidia and, domestically, Canadian inflation data for October.
Commodity sectors propelled the gains in Toronto. Gold prices rose sharply as investors looked for a safe haven to park money after the Russia-Ukraine war escalated. The stalled U.S. dollar, which has been rising for the past few weeks, added to the bullion demand. Spot gold jumped 1.84% to US$2,608.57 per ounce, helping basic materials post an increase of 2.32%.
The U.S. decision to authorize long-range Ukrainian strikes into Russia pushed crude oil prices higher, with the Brent crude price rising 3.15% to US$73.28 per barrel. The TSX energy sector advanced by 0.8%.
Canada will release consumer-price data on Tuesday and the numbers could help determine the size of the expected rate cut by the Bank of Canada next month. Money markets are currently pricing in about a 70% chance it will be a 25 basis point cut, with bets of a larger cut fading over the past week.
In economic news, Canadian housing starts rose 8% in October, compared with the previous month, as groundbreaking increased on multi-unit and single-family detached homes.
Nvidia reports third-quarter earnings on Wednesday when investors will assess demand for chips and the sustainability of the AI euphoria that drove much of the market’s rally this year.
The chip designer, which powered 20% of the S&P 500′s return over the past year, is expected to drive nearly 25% of its EPS growth in the third quarter, according to BofA Global Research. Nvidia’s shares fell 1.3% after a report said its new AI chips were overheating in servers.
“While Nvidia is the last of the Magnificent Seven to report, you’ve seen a nice broadening in earnings and attention,” said Carol Schleif, chief investment officer at BMO Family Office. “It’ll be noteworthy, but it doesn’t feel like there’s the same level of impetus around it as there was a quarter or two ago.”
The Dow Jones Industrial Average fell 55.39 points, or 0.13%, to 43,389.60, the S&P 500 gained 23.00 points, or 0.39%, to 5,893.62 and the Nasdaq Composite gained 111.69 points, or 0.60%, to 18,791.81.
Energy stocks led the S&P, popping 1.05%, with consumer discretionary also rising 1.04% as Tesla jumped 5.6% following a Bloomberg report that members of President-elect Donald Trump’s transition team were seeking to ease U.S. rules for self-driving cars. Industrial stocks were the biggest sectoral decliner.
CVS Health’s shares gained 5.4% after the health insurer said it would add four new members to its board in an agreement with Glenview Capital Management.
“I think a lot of specific sectors could be pretty volatile until we get more verbiage out of Trump’s new picks later this month,” Schleif said.
Stock indexes have shed some of the sharp gains that followed Trump’s decisive victory, but Wall Street remains fairly well-placed as 2024 winds down.
Rising expectations that the Federal Reserve will slow the pace of policy easing and uncertainty over the impact of Trump’s cabinet appointments led to the S&P 500 and the Nasdaq logging their worst weekly losses in more than two months last week.
With the key holiday shopping season set to commence, results from major retailers including Walmart, Lowe’s Companies and Target will be closely watched this week to gauge the strength of the U.S. consumer.
Advancing issues outnumbered decliners by a 1.71-to-1 ratio on the NYSE where there were 159 new highs and 88 new lows. On the Nasdaq, 2,158 stocks rose and 2,150 fell as advancing issues and decliners had a 1-to-1 ratio. The S&P 500 posted 29 new 52-week highs and 13 new lows while the Nasdaq Composite recorded 69 new highs and 265 new lows. Volume on U.S. exchanges was 14.94 billion shares, compared with the 14.12 billion average for the full session over the last 20 trading days.
Reuters, Globe staff