Wall Street’s major indexes ended higher on Friday, rebounding from the previous day’s sell-off as Amazon’s strong earnings countered a significant drop in U.S. job growth in October. The TSX also rose, with Air Canada a notable advancer.
But bond prices fell. Their yields, which move inversely, rose sharply in both the U.S. and Canada, with some investors wary of buying bonds ahead of the U.S. presidential election on Tuesday. The benchmark 10-year U.S. Treasury yield hit a four-month high, and the Canadian 10-year bond yield traded at its highest level since late July.
In U.S. stock trading, Amazon.com rose 6.2% after it reported earnings late Thursday that revealed strong retail sales, boosting profit above Wall Street estimates.
Meanwhile, Apple fell 1.2% as investors worried about a decline in its China sales during its most recent quarter.
Other so-called Magnificent Seven members Meta Platforms and Microsoft also reported earnings earlier this week and warned on AI-related infrastructure costs, dragging the Nasdaq down on Thursday.
“A new month frequently seems to offer new optimism for investors - especially after we saw a sharp decline yesterday and after seeing encouraging results from Apple and Amazon,” said Sam Stovall, chief investment strategist at CFRA Research.
Equity markets brushed off weak U.S. October nonfarm payrolls data, given disruptions from hurricanes and strikes. The data showed an increase of 12,000 jobs, much smaller than economists’ estimate of a 113,000 rise.
However, the unemployment rate held steady at 4.1%, reassuring investors the labour market remained on solid ground.
After the jobs data was released, investors largely stuck to bets that the central bank would cut rates by 25 basis points in November.
“Third-quarter earnings, interest rates and the election continue to be the main drivers in the near term,” Stovall said.
The Dow Jones Industrial Average rose 288.73 points, or 0.69%, to 42,052.19, the S&P 500 gained 23.35 points, or 0.41%, to 5,728.80 and the Nasdaq Composite gained 144.77 points, or 0.80%, to 18,239.92.
All three indexes were down for the week overall, with the S&P 500 falling 1.38%, the Nasdaq dropping 1.51% and the Dow slipping 0.16%.
The U.S. election is on investors’ minds, with many analysts predicting a close presidential race and some uncertainty over the final outcome. The Fed’s November meeting kicks off the following day.
Betting sites are placing greater odds on Trump winning the U.S. presidency. Trump’s policies, including the introduction of new tariffs, are seen as likely to stoke inflation, which may push bond yields higher.
Meanwhile, the U.S. Treasury will also sell $125 billion in coupon-bearing debt next week, which may weigh on the bond market.
10-year U.S. yields were last up 7.7 basis points at 4.361%, the highest since July 5. It follows a 48 basis point increase in October, which was the largest monthly basis point increase since April.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 98.29 points, or 0.4%, at 24,255.16, after posting on Wednesday its biggest weekly decline in nearly three months.
Domestic economic data was upbeat. It showed that manufacturing activity increased at a faster pace in October as production and employment picked up in anticipation of rising orders.
The TSX consumer discretionary sector climbed 2%, helped by a 6.5% jump in the shares of Magna International after the auto parts maker reported its third-quarter results.
Shares of Air Canada also posted strong gains, rising nearly 14%, after the company raised its annual core profit forecast and announced share buybacks, benefiting from strong demand for international travel.
The move in Air Canada boosted industrials, which ended 0.7% higher, while technology added 1.3% and heavily weighted financials were up 0.9%.
For the week, the index was down 0.9% as energy and interest-rate sensitive stocks lost ground and investors took some profits ahead of Tuesday’s U.S. presidential election.
Energy fell 0.9% on Friday as oil gave back much of its earlier gains, while the utilities and real estate sectors fell 0.9% and 0.8% respectively as bond yields rose.
Amazon.com’s gains lifted the Consumer Discretionary index 2.4% to a more than two-year high, while utility and real estate stocks were the biggest sectoral decliners.
Intel jumped 7.8% after a better-than-expected revenue forecast. An index of chip stocks rose 1%.
Chevron shares rose 2.8% after the company beat third-quarter profit estimates on higher oil output.
Reuter, Globe staff