Canada’s main stock index rebounded on Thursday, recouping half of the losses of the past two days, as stocks across a raft of sectors jumped after an upward revision in U.S. economic growth allayed fears of a recession. Major indexes on Wall Street were mixed, with the Dow outperforming and ending at a fresh record high.
The S&P/TSX composite index closed up 100.32 points, or 0.43%, to 23,227.30, moving back closer to the all-time high it reached on Monday.
U.S. gross domestic product for the second quarter grew at a 3% annualized rate on higher consumer spending, according to data released Thursday, quelling fears of an economic slowdown in the United States.
“This positive news has really solidified investors’ expectations for that optimistic soft landing,” said Candice Bangsund, vice president and portfolio manager, global asset allocation at Fiera Capital Corporation.
A soft landing is essentially a scenario where interest rates are high enough to bring inflation down to a central bank’s target without causing a recession.
The benchmark index was also boosted by earnings in the financial sector, which concluded with an earnings beat by Canada’s fifth-largest bank CIBC. Its shares were up more than 5% on the day.
Statistics Canada will be releasing second quarter GDP numbers on Friday, with most analysts expecting a 1.6% quarter-on-quarter annualized growth. The numbers are most likely to firm up expectations of another 25 basis point rate cut next week, bringing Bank of Canada’s key policy rate to 4.25%.
In U.S. trading, artificial intelligence chipmaker Nvidia dropped after its largely in-line forecast failed to impress investors. Nvidia’s quarterly revenue forecast late on Wednesday disappointed investors accustomed to the chipmaker beating expectations by massive margins in recent quarters. Nvidia’s stock fell over 6%, trimming its 2024 gain to 137%.
Other AI-related stocks were mixed. Microsoft gained 0.6%, while Google-owner Alphabet dipped 0.7%.
Broadcom and Advanced Micro Devices each slid almost 1%.
“It’s too early to put the bear suit on for AI related companies. We think there’s still more upside,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “We see the AI revolution still in the relatively early innings and that bodes well for tech names.”
Apple rose 1.5% after Citigroup named the iPhone maker its top AI pick.
The Dow Jones Industrial Average rose 0.59% to 41,335.05 points. The S&P 500 index ended barely changed at 5,591.96 points, just below its July record high close as expectations for a September interest rate cut remained robust. The Nasdaq declined 0.23% to 17,516.43 points.
In other economic data Thursday, a U.S. Labor Department report showed marginally lower-than-expected jobless claims for the previous week.
The July Personal Consumption Expenditures report, due on Friday, could offer hints on the Federal Reserve’s monetary policy easing trajectory.
In stock moves Thursday, CrowdStrike gained 2.8% after the cybersecurity company beat quarterly revenue estimates, while Dollar General slumped 32% after slashing its annual sales and profit forecasts.
Advancing issues outnumbered falling ones within the S&P 500 by a 2.1-to-one ratio. The S&P 500 posted 68 new highs and four new lows; the Nasdaq recorded 91 new highs and 90 new lows. Volume on U.S. exchanges was relatively light, with 10.5 billion shares traded, compared to an average of 11.6 billion shares over the previous 20 sessions.
Reuters, Globe staff