Canada’s main stock index rose on Tuesday, as gains in consumer-related shares offset losses in energy stocks, while investors assessed U.S. economic data amid rising expectations of a Federal Reserve rate cut.
At 10:45 a.m. ET, Toronto’s S&P/TSX composite index was up 165.37 points, or 0.54 per cent, at 30,769.72. The index climbed to a 12-day high the previous session after dovish remarks by voting members on the Federal Open Market Committee, John Williams and Christopher Waller.
“We now have the markets once again rethinking what potentially may happen in the December Fed meeting, with another rate cut being the most likely scenario,” said Angelo Kourkafas, investment strategist at Edward Jones Investments.
Markets are pricing in about an 82 per cent chance of a quarter-point cut in December, according to CME’s FedWatch Tool, up from less than 50 per cent just one week ago.
On TSX, the consumer staples and consumer discretionary stocks were the standout performers on Tuesday, rising 2.1 per cent and 1.7 per cent, respectively.
Convenience store operator Alimentation Couche-Tard jumped 4.5 per cent after beating estimates for second-quarter profit.
Meanwhile, data on the day revealed U.S. retail sales increased at a slower pace than anticipated in September, following a period of robust growth.
“Overall, I don’t think the data really changes the narrative. The consumer remains resilient, and we haven’t seen the data impact the rate cut bets,” Kourkafas said.
Energy shares fell 1.2 per cent as oil prices declined on concerns of potential oversupply next year.
The S&P 500 and Nasdaq fell on Thursday, as Nvidia’s shares tumbled on concerns over intensifying competition in the AI chip space, while investors digested mixed economic data delayed by the U.S. government shutdown.
Alphabet’s shares rose 2.7 per cent after the Information reported Facebook-parent Meta Platforms was in discussions to use Google’s AI chips in its data centers from 2027 and rent chips from Google Cloud by next year.
Nvidia, which currently dominates the AI chips sector, dropped 6.7 per cent to a two-month low, while Advanced Micro Devices fell 9 per cent.
The Philadelphia SE Semiconductor index dropped 3 per cent, having bounced 4.6 per cent on Monday.
“There’s a false expectation that there’s only one chip company out there and no one else is working in terms of competition and we’ve got a headline to remind us that that’s just not the case,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.
The Nasdaq logged its biggest one-day gain in six months on Monday, as investors scooped up tech stocks following several bouts of selling in recent weeks driven by worries of stretched valuations in the sector and high AI spending by large companies.
The S&P 500 and Nasdaq are on course to record their worst monthly performances since March.
The Dow Jones Industrial Average rose 131.79 points, or 0.29 per cent, to 46,583.58. The S&P 500 fell 8.75 points, or 0.13 per cent, to 6,696.37 and the Nasdaq Composite fell 126.39 points, or 0.56 per cent, to 22,744.50.
A Commerce Department report showed retail sales increased 0.2 per cent in September, less than the 0.4 per cent rise that economists polled by Reuters were anticipating.
A separate report showed producer prices rebounded in September as the cost of energy goods surged and producers passed on some tariffs.
Trader bets for an interest rate cut of 25 basis points next month were little changed following the data and were last at an 83 per cent chance, doubling from around 40 per cent last week, according to the CME Group’s FedWatch Tool.
Market sentiment has recently been supported by growing bets the Federal Reserve will lower borrowing costs in December following dovish remarks by voting members on the Federal Open Market Committee such as John Williams and Christopher Waller.
“Some of the data is suggesting the economy is slowing. It does give the Fed the first piece of data to think about cutting at least,” said Blancato.
Meanwhile, the hunt for the next Fed Chair was on, with Treasury Secretary Scott Bessent saying the announcement could come as soon as pre-Christmas.
Eight of the 11 major S&P 500 sectors were higher, with communication services and healthcare indexes leading gains.
Retailers got a lift too after department store operator Kohl’s jumped 34 per cent and clothing retailer Abercrombie & Fitch surged 28 per cent, with both companies raising their annual earnings forecasts.
Apparel retailer Burlington Stores tumbled 10.5 per cent after its third-quarter revenue missed estimates.
U.S.-listed shares of Alibaba slipped 2.3 per cent, reversing early gains after the Chinese e-commerce giant beat analysts’ estimates for quarterly revenue.
On the Nasdaq, advancing issues outnumbered decliners by about a 1.45-to-1 ratio and a 2.3-to-1 ratio on the NYSE.
Reuters
