Canada’s main stock index rose to an all-time high on Monday, helped by gains for financial and metal mining shares, as investors awaited potential clues this week that the Federal Reserve could soon begin an interest rate cutting campaign.
The S&P/TSX composite index ended up 61.78 points, or 0.3%, at 23,116.39, moving past the record closing high it set on July 31. It was the eighth consecutive day of gains for the index, the longest such streak since April 2023.
Both the S&P 500 and the Nasdaq also rose for an eighth straight day, building on their largest weekly percentage gain of the year.
Recent data has shown U.S. consumer resiliency despite economic softening, boosting expectations that the Federal Reserve will start lowering interest rates at its September policy meeting by cutting the Fed funds target rate by 25 basis points.
Fed Chair Jerome Powell’s remarks at the Jackson Hole Economic Symposium, due on Friday, will be parsed for clues regarding the central bank’s path from restrictive to neutral monetary policy.
“What’s behind (this rally) is the hope that the spigots will continue to be open with the Fed potentially cutting rates in September,” said Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois.
“Money is looking for a place to go, and it’s going into the equity markets.”
A slim majority of economists polled by Reuters say the Fed will implement three 25-basis-point rate cuts by the end of the year, and the economy will probably be able to avoid recession as inflation abates.
“I think (Powell) is going to reiterate some of the talking points that the Fed made, that they’re getting a little bit more comfortable with the fact that inflation is coming down to target,” Nolte added. “They’re comfortable with the economy doing reasonably well, and that will be interpreted by the markets as a door-opener for a September rate cut.”
The Democratic National Convention in Chicago, which started on Monday, could fuel market volatility that is already heightened due to light, late-summer trading volume.
The CBOE market volatility index a gauge of investor anxiety, retreated at a record pace last week from a four-year high amid growing optimism of a soft landing.
Goldman Sachs lowered the odds of a U.S. recession in the next 12 months to 20% from 25% following the latest weekly jobless claims and retail sales reports.
Heavily weighted financials in Toronto Monday added 0.3%, while the materials group was up 1.4%, helped by gold’s recent move to a record high.
Shares of Alimentation Couche-Tard Inc fell 2.2% after the company sounded out Japan’s Seven & i about a potential takeover.
Energy was also a drag, falling 0.5%, as the price of oil settled nearly 3% lower at US$74.37 a barrel.
Canada’s freight rail network could come to a grinding halt this week after Canadian National Railway and Canadian Pacific Kansas City on Sunday issued lockout notices to the Teamsters union, which represents nearly 10,000 workers. Shares of both railroads ended higher.
On Wall Street, the Dow Jones Industrial Average rose 236.77 points, or 0.58%, to 40,896.53. The S&P 500 gained 54 points, or 0.97%, at 5,608.25 and the Nasdaq Composite added 245.05 points, or 1.39%, at 17,876.77.
All 11 of the major S&P 500 ended higher, with communication services enjoying the biggest percentage gain.
Advanced Micro Devices rose 4.5% after the chipmaker said it plans to acquire server maker ZT Systems for $4.9 billion to expand its artificial intelligence portfolio to better compete with Nvidia.
B. Riley Financial slid 5.8%, extending a drop of over 65% last week. Co-founder and co-CEO Bryant Riley had offered to buy the bank on Friday after it warned of a hit from its investment in Vitamin Shoppe-owner Franchise Group.
Quarterly results from cybersecurity firm Palo Alto Networks , retailer Target and home improvement chain Lowe’s are due later this week.
Advancing issues outnumbered decliners on the NYSE by a 3.54-to-1 ratio; on Nasdaq, a 2.71-to-1 ratio favored advancers.
The S&P 500 posted 32 new 52-week highs and no new lows; the Nasdaq Composite recorded 105 new highs and 65 new lows.
Volume on U.S. exchanges was 10.30 billion shares, compared with the 12.24 billion average for the full session over the last 20 trading days.
Reuters, Globe staff