The S&P 500 slipped 13.52 points, or 0.3%, to 4,769.83. The benchmark index still posted a rare ninth consecutive week of gains and is just 0.6% shy of an all-time high set in January of 2022.
The Dow Jones Industrial Average fell 20.56 points, or 0.1%, to 37,689.54 after setting a record Thursday.
The Nasdaq slipped 83.78 points, or 0.6%, to 15,011.35, but that was barely a blemish on an annual gain of more than 43%, its best performance since 2020.
For most of the year, gains in the broader market were driven largely by seven stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla. Dubbed the Magnificent 7, they accounted for about two-thirds of the gains in the S&P 500 this year, according to S&P Dow Jones Indices. Nvidia lead the group with a gain of about 239%, driven by the mania surrounding artificial intelligence.
A strong rally in November and December marked a big psychological shift for investors, said Quincy Krosby, chief global strategist at LPL Financial, because it went beyond the big technology companies. The Russell 2000 index of smaller companies jumped more than 20% over the two months and finished 2023 with a 15.1% gain after falling 21.6% in 2022.
“It was broad participation in the market that reinforced and confirmed gains for smaller company stocks that were particularly important,” Krosby said.
Investors in the U.S. came into this year bearing the bruises of sharp losses for both stocks and bonds in 2022. They expected inflation to ease further as the Federal Reserve pushed interest rates higher. The trade-off would be a weaker economy and possibly a recession. But while inflation has come down to around 3%, the economy has chugged along thanks to solid consumer spending and a healthy job market.
The stock market is now betting the Fed can achieve a “soft landing,” where the economy slows just enough to snuff out high inflation, but not so much that it falls into a recession. As a result, investors now expect the Fed to begin cutting rates as early as March.
The Fed has signaled three quarter-point cuts to its benchmark interest rate next year. That rate is currently sitting between 5.25% and 5.50%, its highest level in two decades.
Lower rates could add more fuel to the broader market’s momentum in 2024. Wall Street is forecasting stronger earnings growth for companies next year after a largely lackluster 2023, when companies wrestled with higher input and labor costs and a shift in consumer spending.
Bond market investors appeared headed for a third losing year in a row until things turned around starting in late October. Excitement about potential cuts to interest rates sent bond prices soaring and yields dropping. The yield on the 10-year Treasury, which hit 5% in October, stood at 3.88% Friday, up from 3.85% on Thursday.
The yield on the two-year Treasury, which more closely tracks expectations for the Fed, fell to 4.25% from 4.28% from late Thursday. It also surpassed 5% in October.
Many global markets also saw solid gains this year. Indexes in France and Germany made double-digit advances, while Britain’s has climbed just under 4%.
Tokyo’s Nikkei 225 gained 27% in 2023, its best year in a decade as the Japanese central bank inched toward ending its longstanding ultra-lax monetary policy after inflation finally exceeded its target of about 2%.
The Shanghai Composite index lost about 3% this year and the Hang Seng index in Hong Kong fell nearly 14%. Weakness in the property sector and in global demand for China’s exports, as well as high debt levels and wavering consumer confidence have weighed on the country’s economy and the stock market.
U.S. and international crude oil prices were relatively stable on Friday. The price of oil tumbled by more than 10% this year, defying predictions from some experts that it could cross $100 per barrel.
Despite production cuts from OPEC, a war involving energy exporter Russia and another in the Middle East, U.S. benchmark crude dropped nearly 11% in 2023, and a whopping 21% in the final three months of the year.
Increased production in the U.S., now the top oil producer in the world, as well as Canada, Brazil and Guyana offset the reduced output from OPEC. Not all OPEC members participated in the cuts and some countries like Iran and Venezuela are pumping more oil, energy analysts say.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
