TORONTO — Canada's main stock index gained almost one per cent Wednesday, led by base metal, industrial and technology stocks, while U.S. markets rallied to reverse the selloff that started the day.
Tech stocks helped lift Wall St. to a winning close even though most of the stocks on the S&P 500 finished lower for the day, after the latest report on U.S. inflation tempered expectations for an upcoming interest rate cut.
In New York, the Dow Jones industrial average was up 124.75 points at 40,861.71. The S&P 500 index was up 58.61 points, or 1.1 per cent, at 5,554.13, while the Nasdaq composite was up 369.65 points, or 2.2 per cent, at 17,395.53.
The S&P/TSX composite index closed up 208.08 points at 23,211.17.
Though the overall inflation number came in about as expected, it was the underlying core inflation metric from July to August that disappointed investors, Candice Bangsund, vice-president and portfolio manager with Fiera Capital.
“This is the number that (U.S.) Federal Reserve officials are looking at,” she said, as it excludes volatile items like energy and food.
Headline U.S. inflation showed consumer prices rose 2.5 per cent in August year-over-year, down from 2.9 per cent in July and a little lower than expected. But so-called core prices rose 0.3 per cent in August month-over-month, an uptick from 0.2 per cent July.
“A small beat, but nonetheless concerning, given that a lot of that was a result of services inflation, which has been stubbornly elevated, and particularly in shelter,” said Bangsund.
With the inflation report, investors were looking for clues as to the magnitude of the upcoming expected rate cut from the central bank next week, said Bangsund.
Though the Fed is widely expected to begin cutting its key interest rate after the hiking cycle that began in 2022, some market watchers thought it could begin with a half-percentage-point cut due to softening in the job market, instead of a quarter of a percentage point.
“Today’s report ... has really dashed those hopes,” said Bangsund.
Meanwhile, oil recovered after hitting a two-year low the day before, said Bangsund, likely over worries of potential supply disruptions due to Hurricane Francine.
“That's putting upward pressure on prices today, and basically countering what was a bearish inventory report this morning from the Department of Energy that showed a surprise increase in stockpiles,” she said.
In Canada, Dollarama reported higher earnings and sales for its second-quarter, which Bangsund said underscores the Canadian consumer's vulnerability to higher interest rates.
The Canadian dollar traded for 73.59 cents US compared with 73.53 cents US on Tuesday.
The October crude oil contract was up US$1.56 at US$67.31 per barrel and the October natural gas contract was up four cents at US$2.27 per mmBTU.
The December gold contract was down 70 cents at US$2,542.40 an ounce and the December copper contract was up four cents at US$4.14 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 11, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
