Major North American stock indexes added to their monthly advance on Friday, as investors cheered U.S. data that showed the economy on a solid footing.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 118.69 points, or 0.5%, at 23,346.18, stopping just short of Monday’s record closing high. For the month, the TSX added 1% after climbing 5.7% in July.
U.S. consumer spending increased 0.5% in July and prices rose moderately, curbing inflation, a report from the U.S. Commerce Department showed.
“Overall, it looks like the U.S. economy is fine,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth. “The market is liking it.”
Separate data showed the Canadian economy grew at a faster-than-expected annualized pace of 2.1% in the second quarter but still at a pace that was consistent with further interest rate cuts by the Bank of Canada.
The Canadian central bank will cut its benchmark rate by 25 basis points for a third straight meeting on Sept. 4 and again in October and December, economists and money markets are predicting.
Heavily weighted financials in Toronto rose 1%, helped by a gain of 1.6% for the shares of Canadian Imperial Bank of Commerce after the bank beat earnings estimates. CIBC was the last of Canada’s six major banks to report results.
“I don’t have a problem with the earnings and in fact on any dips I’ve been buying Canadian banks,” Small said.
Technology added 1.3% but energy was a drag, falling 1.4%, as the price of oil settled 3.1% lower at $73.55 a barrel on expectations of a rise in OPEC+ supply starting in October.
On Wall Street, the Dow scored a second consecutive all-time closing high. Amazon.com and Tesla each jumped over 3%.
“Investors are seeing another sign of being in a soft landing,” said Cameron Dawson, chief investment officer at Newedge Wealth. “It’s another one of those Goldilocks kind of reports really threading a needle right down the center. The market is really getting exactly what it wanted.”
A “just-right” Goldilocks economy has steady growth, but not too much that it fuels excessive inflation.
Broadcom rallied nearly 4%, while Marvell Technology surged 9% after the chipmaker forecast quarterly results above estimates.
The U.S. personal consumption expenditures report came on Friday after Fed Chair Jerome Powell last week expressed support for an imminent policy adjustment.
Economic data next week in the U.S. includes the Labor Department’s August jobs report, due on Friday.
Money markets suggest traders mostly expect the Fed to cut rates by 25 basis points in September, with odds of a 50 basis point cut dimming further after Friday’s data, according to CME Group’s FedWatch Tool.
Friday ended a tumultuous month on Wall Street after signs of a sudden moderation in the labour market in early August sparked fears of a U.S. recession. The influence of the Japanese yen carry trade worsened the rout.
Shares have rebounded since then, with the S&P 500 trading near record highs.
Ahead of Monday’s U.S. stock market holiday for Labor Day, volume on U.S. exchanges was relatively light, with 11.2 billion shares traded, compared to an average of 11.4 billion shares over the previous 20 sessions.
The S&P 500 climbed 1.01% to end at 5,648.40 points.
The Nasdaq Composite Index climbed 1.13% to 17,713.62 points, while the Dow Jones Industrial Average rose 0.55% to 41,563.08 points.
All 11 S&P 500 sector indexes rose, led by consumer discretionary, up 1.9%, followed by a 1.1% gain in industrials.
For the month, the S&P 500 rose 2.3%, the Dow added 1.8% and the Nasdaq climbed 0.6%.
Nvidia rose 1.5%, rebounding from a 6.4% drop on Thursday after the artificial intelligence-chip bellwether failed to match sky-high investor expectations, despite upbeat results and a broadly in-line forecast.
Novavax surged 8.6% after the U.S. Food and Drug Administration granted emergency use authorization for an updated version of its COVID shot.
Ulta Beauty slid 4% after it trimmed its annual results forecasts, citing slowing demand for higher-priced cosmetics and fragrances at its stores.
Intel jumped almost 10% following a report it was exploring options that could include a merger.
Dell Technologies, another AI-related stock, advanced 4.3% after lifting its annual revenue and profit forecasts.
Shares of Trump Media & Technology Group, majority owned by former U.S. President Donald Trump, dipped 1.7% to a record low, leaving its stock market value at $3.9 billion.
Advancing issues outnumbered falling ones within the S&P 500 by a 6.6-to-one ratio.
The S&P 500 posted 79 new highs and two new lows; the Nasdaq recorded 84 new highs and 77 new lows.
Reuters, Globe staff