TSX set for biggest daily gain in a year on earnings boost

North American main stock indexes rallied on Thursday on hopes that the U.S. Federal Reserve had reached the end of its tightening campaign, while a raft of upbeat corporate updates added to the bullish mood in both Canada and the U.S. If the gains hold, the Canadian benchmark stock index will have achieved its biggest daily gain in a year.

The Fed held interest rates steady on Wednesday as expected, and while Chair Jerome Powell left the door open to further tightening he also acknowledged the impact of a recent surge in bond yields on the economy.

The comments, which were perceived to be dovish, sent U.S. Treasury yields tumbling, with the benchmark 10-year yield hitting near three-week lows.

“Our base case is that the Fed is done, but that they will take time to cut rates,” said Raphael Olszyna-Marzys, international economist at J Safra Sarasin. “There’s a decent possibility that they will have to do more (hikes), but this is not how the market is seeing it for the moment.”

All three major U.S. stock indexes touched their highest level since Oct. 19.

Mega-cap growth stocks including Microsoft, Nvidia, Alphabet and Tesla rose between 0.2% and 3.9%.

All 11 major S&P 500 sectors were trading higher, with real estate and consumer discretionary leading gains.

Traders pared back the risk of a December hike to about 20% and a January move to 25%, according to the CME Group’s FedWatch tool. They have also priced in a 70% chance that the tightening is over.

Canada’s main stock index hit a two-week high, supported by upbeat earnings from e-commerce firms Shopify and Lightspeed along with jet maker Bombardier, while higher commodity prices also lifted sentiment.

At 10:13 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 308.55 points, or 1.62%, at 19,387.55.

The information technology index led sectoral gains, jumping 5.4% on upbeat earnings from Shopify and Lightspeed and was set to mark its biggest gain in nearly a year.

Shopify led the index, adding 19.7% after returning to profit in the third quarter and posting quarterly revenue above market expectations.

Software provider Lightspeed Commerce advanced 14.6% after the firm raised its annual revenue forecast.

Bombardier also reported third-quarter results that beat analysts’ estimates, helped by robust demand for pricier business jets and strength in its aftermarket business.

The jet maker moved 7.8% higher while the industrial index was up 1.1%.

The energy sector climbed 0.6% on higher oil prices as risk appetite returned to financial markets after the U.S. Federal Reserve kept benchmark interest rates on hold.

The materials sector, which includes precious and base metals miners and fertilizer companies, also rose 0.1% as prices of most non-ferrous metals, including copper and gold, gained on a pullback in the U.S. dollar and Treasury yields.

Meanwhile, First Quantum Minerals shares snapped a three-day losing streak to climb 3.8% higher amid uncertainty over the future of its key Panama copper mine.

On the U.S. earnings front, Qualcomm climbed 5.9% after the chip designer forecast first-quarter sales and profit above Wall Street estimates as a slowdown in smartphone sales eases.

PayPal advanced 3.9% as the payments giant raised its full-year adjusted profit forecast.

Starbucks jumped 9.4% after fourth-quarter results beat estimates, while data analytics firm Palantir Technologies rose 18.8% on forecasting quarterly revenue above estimates.

Moderna dropped 10.5% after lowering its 2023 COVID-19 vaccine sales forecast. Drugmaker Eli Lilly jumped 6.6% after beating quarterly sales estimates.

Apple’s shares advanced 1.2% ahead of its quarterly numbers due after markets close on Thursday.

At 9:38 a.m. ET, the Dow Jones Industrial Average was up 307.02 points, or 0.92%, at 33,581.60, the S&P 500 was up 51.87 points, or 1.22%, at 4,289.73, and the Nasdaq Composite was up 172.71 points, or 1.32%, at 13,234.18.

The Cboe Volatility index, also known as Wall Street’s fear gauge, touched a three-week low.

U.S. equities have kicked off November on a brighter note following a bruising October marred by fears of higher-for-longer interest rates and geopolitical tensions.

Meanwhile, data showed the number of Americans filing new claims for unemployment benefits increased moderately last week as the labor market continues to show few signs of a significant slowdown.

The main data point of the week will be the October non-farm payrolls report on Friday, which will offer more clarity on the state of the labor market.

Advancing issues outnumbered decliners by a 8.67-to-1 ratio on the NYSE and by a 4.50-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and six new lows, while the Nasdaq recorded 19 new highs and 47 new lows.

Reuters, Globe staff

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