The S&P 500 index and technology-laden Nasdaq rose on Wednesday to post record high closes, as data pointing to a softening U.S. economy raised hopes the Federal Reserve could cut interest rates in September. Canada’s main stock index rose to a near four-week high, with metal mining stocks leading a broad-based rally as the U.S. dollar weakened.
Both the U.S. ADP Employment report and weekly jobless claims data pointed to easing labour market conditions ahead of Friday’s closely watched non-farm payrolls report. Markets hope signs of weakness in the labour market will encourage the Fed to cut interest rates.
“It’s quite a strong unemployment claims number, and it’s fitting in with an overall trend that’s probably an indication of loosening up in the jobs market. It must be quite welcoming for the Fed,” said David Morrison, Trade Nation senior market analyst.
Also, PMI data from the Institute for Supply Management was weaker than expected, and factory orders unexpectedly slumped. Investors boosted bets of a September rate cut to over 70%, as per LSEG’s FedWatch tool.
The S&P/TSX composite index ended up 269.87 points, or 1.2%, at 22,223.67, its highest closing level since June 6.
The U.S. 10-year Treasury yield eased about 8 basis points to 4.35% and the U.S. dollar touched a near three-week low against a basket of major currencies.
The TSX materials group rose 3.4%, as a weaker U.S. dollar boosted gold and copper prices.
The price of oil also rose, settling 1.3% higher at US$83.88 a barrel. That helped the energy group, which was up 0.6%.
All ten major sectors on the Toronto market ended higher, with heavily weighted financials up 1% and industrials adding 1.4%.
The utilities group, which is dominated by high dividend-paying stocks that could particularly benefit from lower interest rates, climbed 1.5%.
Shares of Open Text Corp ended 1.5% higher after the company announced a business optimization plan expected to result in the reduction of nearly 1,200 positions.
The Dow Jones Industrial Average closed slightly lower, pressured by selling in health care and consumer stocks during a shortened trading session ahead of the Fourth of July. The market will stay closed on Thursday for U.S. Independence Day, keeping trading volumes thin throughout the week.
Tesla jumped 6.5%, trading near a six-month high after rising more than 10% on Tuesday following a smaller-than-expected drop in second-quarter vehicle deliveries.
The Philadelphia SE Semiconductor Index rose 1.92%, helped by gains in the U.S. listing of Taiwan Semiconductor Manufacturing and Broadcom.
Nvidia closed 4.6% higher, after slipping on Tuesday, while some other mega-stocks were weaker such as Amazon , closing 1.2% lower.
The S&P 500 has jumped over 15% in the first half of 2024, largely supported by top-tier high momentum technology-related stocks. The benchmark index’s equal-weighted counterpart only rose 5% and small and mid-cap stocks have significantly lagged.
The Dow Jones Industrial Average fell 23.85 points, or 0.06%, to close at 39,308.00, the S&P 500 gained 28.01 points, or 0.51%, to 5,537.02 and the Nasdaq Composite gained 159.54 points, or 0.88%, to 18,188.30.
Paramount Global rose almost 7% after Shari Redstone’s National Amusements reached a preliminary deal to sell its controlling interest in the media giant to David Ellison’s Skydance Media.
First Foundation slumped nearly 24% after the lender, which holds a huge portfolio of multifamily real estate loans, disclosed a $228 million unexpected capital raise.
Advancing issues outnumbered decliners by a 2.65-to-1 ratio on the NYSE. There were 287 new highs and 50 new lows on the NYSE. The S&P 500 posted 20 new 52-week highs and 4 new lows while the Nasdaq Composite recorded 51 new highs and 114 new lows. Volume for the abbreviated session on U.S. exchanges was 7.11 billion shares, compared with the 11.64 billion average for the full session over the last 20 trading day
Reuters, Globe staff