TORONTO – Canada’s main stock index rose Wednesday amid broad-based strength on Bay St., while U.S. stock markets coasted after the latest report on inflation.
The S&P/TSX composite index closed up 141.83 points at 22,760.01.
In New York, the Dow Jones industrial average was up 242.75 points at 40,008.39. The S&P 500 index was up 20.78 points at 5,455.21, while the Nasdaq composite was up 4.99 points at 17,192.60.
Wednesday’s report on U.S. consumer inflation came in about as expected, with annual inflation for July reaching its lowest level in more than three years at 2.9 per cent.
The report, which was highly anticipated by investors nervous it would come in too hot, ended up being a bit of a “non-event,” said Greg Taylor, chief investment officer at Purpose Investments.
“It was basically in line,” he said.
“I think this was more validation that things are working.”
The equity market’s tepid reaction showed investors are growing less concerned with whether high interest rates have successfully tamed inflation, and more focused on whether the U.S. Federal Reserve is waiting too long to cut rates and risking a recession, said Taylor.
Investors will be looking at indicators such as payroll data for insight into how the economy is faring, he said.
Markets are pricing in three to four cuts from the Fed this year, with the first expected in September — and some think it could be a supersized cut of 50 basis points, said Taylor, especially after last week’s market temper tantrum and a worse-than-expected labour report for July.
“The Fed’s trying to thread the needle … not to spur on inflation and not to have the economy collapse,” he said.
Markets are currently pricing in about a 65 per cent chance of a 25-basis-point cut in September, according to financial data firm CME Group.
The Dow led Wall St. Wednesday with a gain of 0.6 per cent as a healthy rotation continues away from the large tech stocks that have fuelled the market this year, noted Taylor.
“Markets are not healthy when they’re only led by a few stocks, and it’s way better and stronger longer term if there’s more participation,” he said.
The Canadian dollar traded for 72.93 cents US compared with 72.87 cents US on Tuesday.
The September crude oil contract was down US$1.37 at US$76.98 per barreland the September natural gas contract was up seven cents at US$2.22 per mmBTU.
The December gold contract was down US$28.10 at US$2,479.70 an ounce and the September copper contract was down a penny at US$4.03 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Aug. 14, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
