The Dow Jones Industrial Average led Wall Street higher on Monday and notched its longest winning streak in six years as investors bet on sectors beyond technology in a week filled with earnings reports and a Federal Reserve meeting. The Canadian benchmark index posted only a modest gain, but it was enough for its highest close in 2 1/2 months, with energy stocks doing the heavy lifting.
“What you’re seeing now is people broadening the breadth of the market,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.
“People are starting to maybe take some profits (in tech) and invest in other parts of the markets that they might see a little bit better bargain.”
Investors are awaiting Microsoft, Google-owner Alphabet and Meta Platforms earnings this week, which will show whether their stocks justify sky-high valuations. Second-quarter earnings are expected to decline by 7.9%, Refinitiv data showed.
The tech-heavy Nasdaq Composite Index has rallied 41% this year, outperforming its peers as rate-sensitive megacap growth companies rose on optimism about artificial intelligence and an end to the Fed’s tightening cycle.
Effective Monday, exchange operator Nasdaq trimmed the weight of a handful of companies that make up close to half of the Nasdaq 100 to address “over-concentration” in the benchmark. The Nasdaq lagged other indexes, however, as investors looked to non-tech stocks for bargains, lifting sectors from energy to banks.
Helping the Dow notch its longest winning streak since February 2017, Chevron gained almost 2% as the oil giant posted upbeat preliminary quarterly earnings over the weekend.
Investors ignored a survey showing July U.S. business activity had slowed to a five-month low, dragged down by decelerating service-sector growth.
“You’ve got an increasing belief that soft landing and an increasingly dovish Fed may occur,” said Carol Schleif, chief investment officer with the BMO Family Office, adding some sideline cash is coming back to stocks.
The Fed is expected to raise interest rates by 25 basis points at its policy-making meeting on Wednesday.
A majority of economists polled by Reuters expect this to be the last hike of the current tightening cycle, after data this month showed signs of disinflation.
The Dow Jones Industrial Average rose 183.55 points, or 0.52%, to 35,411.24, the S&P 500 gained 18.3 points, or 0.40%, to 4,554.64 and the Nasdaq Composite added 26.06 points, or 0.19%, to 14,058.87.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 34.61 points, or 0.2%, at 20,582.12, its highest closing level since May 9.
The Toronto market’s energy sector rose 1.7% as oil settled 2.2% higher at US$78.74 a barrel. A combination of tightening supply, rising U.S. gasoline demand and hopes for Chinese stimulus measures helped lift oil prices.
Real estate was also a bright spot, rising 0.5%.
Among stock moves, TC Energy Corp fell 2.6% after the company entered into a deal to sell a 40% interest in its Columbia Gas Transmission and Columbia Gulf Transmission pipelines for C$5.2 billion.
Canadian earnings season will pick up pace this week, with railroad operator Canadian National Railway, telecoms major Rogers Communications and mining firm Teck Resources among the major companies reporting quarterly results.
On Wall Street Monday, nine of the 11 major S&P 500 sectors rose, led by a gain in energy stocks.
Toymaker Mattel rose 1.8% as the “Barbie” movie set a record as the biggest domestic debut of 2023.
AMC Entertainment jumped 32.9% after a judge blocked the theater chain’s stock conversion plan that risked diluting investors’ holdings in the company. AMC’s preferred shares closed flat.
U.S.-listed shares of Chinese companies like Alibaba and JD.com rose 4.5% and 3.5% respectively as its top leaders announced economic policy adjustments to expand domestic demand.
Advancing issues outnumbered decliners on the NYSE by a 1.61-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored decliners. The S&P 500 posted 22 new 52-week highs and one new low; the Nasdaq Composite recorded 58 new highs and 97 new lows.
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
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