North American stocks rebounded on Thursday as investors looked to a spate of high-profile earnings and Friday’s U.S. employment report a day after the Federal Reserve quashed lingering bets that interest rate cuts could begin as early as March.
While a broad rally sent all three major U.S. stock indexes sharply higher, the tech-laden Nasdaq advanced the most. TSX gains were less impressive, mostly owing to a pullback in the energy sector.
“There’s further digestion of the Fed,” said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. “It’s still a growth market and [Wednesday’s] sell-off was an overreaction. So today we’re getting a rally.”
Shares of Meta Platforms spiked 14% in extended trading after reporting better-than-expected revenue and declaring its first-ever dividend.
Amazon.com also gained in post market trading following its earnings release.
Apple Inc dipped in extended trading after profit, revenue beat analyst estimates but China sales missed targets.
On Wednesday, the Federal Open Markets Committee (FOMC) left its policy rate unchanged as expected. At his press conference, Fed Chair Jerome Powell called a March rate cut “unlikely,” resetting market expectations of a dovish Fed pivot in the first quarter, and prompting a steep sell-off.
The KBW Regional Banking index fell 2.3%, weighed down by the 11.1% drop in New York Community Bancorp’s shares after the company reported pain in its commercial real estate portfolio, sparking renewed fears over the health of U.S. regional lenders.
The broader S&P Banking index fared better, ending the day off 1.4%.
Fourth quarter reporting season is going full-bore, with 208 of the companies in the S&P 500 having reported. Of those, 80% have delivered consensus-beating earnings, according to LSEG.
Analysts now expect aggregate S&P 500 earnings growth of 6.4% year-on-year for the October-December period, an improvement over the 4.7% growth seen on Jan. 1, per LSEG.
A raft of economic data showed rising productivity helping to cap U.S. labour costs, while an increase in announced layoffs and weekly U.S. jobless claims provided further evidence of softening in the labour market, which is viewed by the Fed as a precondition to assuring a sustainable downward path for inflation. U.S. manufacturing stabilized in January amid a rebound in new orders, while Canadian manufacturing data also offered encouragement. It showed a slowdown in the pace of contraction in the sector as inflation pressures eased and firms grew more confident about the outlook.
“We see these [U.S.] data, on the eve of the labour report, as consistent with a healthy but moderating labor market,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Billings, Montana. “(These reports) are consistent with our view of the economic path for 2024; that it will continue to grow, but at a slower pace.”
The S&P 500 climbed 1.25% to end the session at 4,906.19 points. The Nasdaq gained 1.30% to 15,361.64 points, while Dow Jones Industrial Average rose 0.97% to 38,519.84 points.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 97.33 points, or 0.5%, at 21,119.21. On Wednesday, the index posted its biggest decline in two weeks as the Fed dashed hopes of a rate cut as soon as March.
Sectors such as industrials and consumer discretionary, which includes large automotive suppliers, could benefit from a manufacturing turnaround. They rose 1.9% and 1.5%, respectively, on the TSX.
The materials sector, which includes precious and base metals miners and fertilizer companies, rallied 2.3% as gold prices rose, but energy was a drag.
It fell 1.3% as the price of oil settled 2.7% lower at US$73.82 a barrel after false market speculation that Israel had agreed to a Gaza ceasefire proposal.
In individual stock moves, Canada Goose Holdings Inc shares climbed 7.9% after the luxury parka maker forecast fourth-quarter revenue above analysts’ estimates.
Allied Properties REIT fell 8.9% after it disclosed a C$499 million writedown as offices remained sparsely staffed in big Canadian cities.
Of the 11 S&P 500 sector indexes, 10 rose, led by consumer discretionary, up 1.98%, followed by a 1.97% gain in consumer staples.
Merck advanced 4.6% after the drug maker’s upbeat fourth-quarter results.
Qualcomm fell 5.0% on concerns over Android sales in China.
Honeywell was off 2.4% after the diversified industrial conglomerate provided disappointing first-quarter guidance.
Across the U.S. stock market, advancing stocks outnumbered falling ones by a 3.0-to-one ratio. Volume on U.S. exchanges was relatively heavy, with 12.0 billion shares traded, compared to an average of 11.6 billion shares over the previous 20 sessions.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
