Major North American stock indexes finished higher on Friday after a strong U.S. jobs report reinforced the view that the world’s biggest economy remains healthy even as it suggested the Federal Reserve could delay cutting interest rates.
The S&P/TSX composite index closed up 212.59 points, or 0.96%, at 22,264.38 - a new all-time high after a broad advance across sectors. It notched its longest weekly winning streak in five years
All major S&P 500 sectors advanced, with communication services, industrials and technology the top gainers.
U.S. Labor Department data showed employers hired far more workers in March than expected and kept steadily lifting wages, suggesting the economy ended the first quarter on solid ground.
The data stoked expectations the Fed will likely delay cutting interest rates given that a recession is nowhere in sight, said Tom Plumb, president and portfolio manager at Plumb Funds in Madison, Wisconsin.
“What we are continuing to see is that a robust economy is not necessarily inflationary, and this labour report, even though it’s just for one month, reinforces that there’s less likelihood of a recession, which is more important than the expectations of the timing of interest rate reductions,” Plumb said.
Canada’s stock market rose as higher commodity prices boosted the outlook for corporate earnings and investors grew more confident the Bank of Canada would cut interest rates in the coming months.
For the week, the TSX was up 0.4%, its eighth straight weekly gain, which is the longest such stretch since February 2019.
“The earnings trajectory has been much weaker on the TSX than the S&P 500 but we are starting to see a bottoming in earnings (growth),” said Christine Tan, a portfolio manager at SLGI Asset Management Inc.
“With commodity prices being so strong that’s certainly positive for the overall earnings profile for the TSX,” Tan added.
Together, the energy and materials sectors account for nearly one third of the Toronto market’s weighting.
The TSX materials group rose 2% as gold climbed to a new all-time high.
The TSX energy sector was up 1.3% as the price of oil settled 0.4% higher at US$86.91 a barrel, adding to its recent gains, with investors watching for signs of any direct military conflict between Israel and Iran that could further tighten supplies.
Among the other standouts was consumer staples. It gained 1.6%.
Money markets see about a 70% chance the Canadian central bank will begin a rate cutting cycle in June, up from 60% before domestic employment data Friday that showed the economy unexpectedly shedding jobs in March, according to Refinitiv Eikon data.
“The jobs numbers in Canada will probably lead to a quicker round of cuts in Canada than in the U.S.,” said Daniel Nowlan, managing director and vice chairman of Equity Capital Markets Group at the National Bank of Canada.
The Dow Jones Industrial Average rose 307.06 points, or 0.80%, to 38,904.04, the S&P 500 gained 57.13 points, or 1.11%, to 5,204.34 and the Nasdaq Composite gained 199.44 points, or 1.24%, to 16,248.52.
U.S. indexes posted declines for the week, however, following mixed economic data during the week including a soft services activity report and a stronger manufacturing report.
For the week, the Dow fell 2.3%, the S&P 500 dropped 1% and the Nasdaq declined 0.8%.
Money markets are now pricing in around two rate cuts this year, down from three a few weeks ago, according to LSEG.
Tesla bucked the day’s broader market trend, with its shares ending down 3.6% following a Reuters report that the electric carmaker had canceled its inexpensive car that was expected to drive its growth into a mass-market automaker.
Among the day’s gainers, Krispy Kreme rose 7.3% after Piper Sandler analysts upgraded the doughnut chain to “overweight” from “neutral.” Shockwave Medical gained 2% after Johnson & Johnson agreed to buy the medical device maker for $12.5 billion.
Volume on U.S. exchanges was 10.11 billion shares, compared with the 11.76 billion average for the full session over the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a 1.44-to-1 ratio; on Nasdaq, a 1.13-to-1 ratio favored advancers. The S&P 500 posted 20 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 67 new highs and 136 new lows.
Reuters, Globe staff