Canada’s main stock index rebounded on Thursday as Royal Bank of Canada reported stronger than expected earnings to round out a mixed results season for Canada’s big six lenders. Major U.S indexes, however, suffered another day of losses, even though trading was overall quite mixed and U.S. data supported prospects of Federal Reserve interest rate cuts.
The S&P/TSX composite index ended up 173.73 points, or 0.79%, at 22,071.71, after it posted on Wednesday its lowest closing level in nearly four weeks.
“On the banks’ side, it was the haves and have nots ... It has been a little bit more volatile in that sense this quarter,” said Diana Avigdor, a portfolio manager and head of trading at Barometer Capital Management.
Royal Bank of Canada, which has the largest market capitalization of any stock on the TSX, said the investment banking environment looked promising as it surpassed profit expectations. The lender’s shares rose 5.19%, the biggest advance since May 2020, to all-time peaks.
Canadian Imperial Bank of Commerce also beat profit expectations, helping to lift its shares 7.01%.
The financials sector overall rose 1.89%, while energy added 0.37% even as the price of oil settled 1.7% lower at $77.91 a barrel.
Oil and gas companies are “exhibiting good corporate discipline” by producing free cash flows, generating special dividends for shareholders and doing stock buybacks, Avigdor said.
Bond yields ticked lower as a Commerce Department report showed the economy grew slower in the first quarter than previously estimated, after downward revisions to consumer and equipment spending and a key measure of inflation ticked lower.
Another set of numbers showed weekly jobless claims rose more than expected.
“Normally you’d expect the market to rally off of a downward revision to GDP because it signals the economy is moderating, the Fed’s job is done, we can get rate cuts. That’s not the reaction we’re getting today,” said Mark Hackett, chief of investment research at Nationwide.
“So I’m a little surprised but not that surprised simply because after the six week (rally) that we’ve had, it’s pretty healthy and expected to see some consolidation or sideways move for a while.”
Investors Friday will be closely monitoring the U.S. personal consumption expenditure report for April, a key reading on inflation.
The utilities sector in Toronto, which includes many high-dividend paying stocks that could particularly benefit from rate cuts, advanced 1.51% on Thursday.
But technology was a drag, falling 1.84%. It was pressured by a decline of 6.84% for the shares of Descartes Systems Group Inc after the company reported quarterly results.
On Wall Street, the Nasdaq fell more than 1% and technology shares led declines after a disappointing Salesforce forecast.
Salesforce shares plunged 19.7%, a day after the company forecast second-quarter profit and revenue below Street estimates due to weak client spending on its cloud and enterprise business products.
The S&P 500 technology sector dropped 2.5%. The communication services sector fell 1.1%, while the rest of the S&P 500 sectors ended higher.
The S&P 500 lost 31.47 points, or 0.60%, to end at 5,235.48, while the Nasdaq Composite lost 183.50 points, or 1.08%, to 16,737.08. The Dow Jones Industrial Average fell 330.06 points, or 0.86%, to 38,111.48.
After the close, Dell Technologies shares fell more than 12% as the company reported quarterly results. The stock ended the regular session down 5.2%.
During the regular session, HP shares jumped 17% after it posted better-than-expected second-quarter revenue.
Tesla rose 1.5% after Reuters reported the company was preparing to register its ‘Full Self-Driving’ software in China.
Retailer Best Buy shares shot up 13.4% after beating forecasts for quarterly profit, while department-store chain Kohl’s slumped 22.9% after cutting its annual sales and profit forecasts.
Advancing issues outnumbered decliners by a 2.57-to-1 ratio on the NYSE and by a 1.41-to-1 ratio on the Nasdaq. The S&P 500 posted 14 new 52-week highs and 10 new lows while the Nasdaq Composite recorded 51 new highs and 95 new lows. Volume on U.S. exchanges was 12.10 billion shares, compared with the 12.39 billion average for the full session over the last 20 trading days.
Reuters, Globe staff
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.