S&P/TSX composite closes up nearly 3%, U.S. stock markets also rise

TORONTO — Canada's main stock index leapt close to three per cent Thursday and U.S. markets also rose as investors shifted bets from long-term bonds towards equities on an improved outlook for interest rates.

The S&P/TSX composite index closed up 547.34 points, or 2.9 per cent, at 19,626.34.

In New York, the Dow Jones industrial average ended up 564.50 points, or 1.7 per cent, at 33,839.08. The S&P 500 index was up 79.92 points, or 1.9 per cent, at 4,317.78, while the Nasdaq composite was up 232.72 points, or 1.8 per cent, at 13,294.19.

Markets in Canada and the U.S. were up sharply after comments from the U.S. Federal Reserve this week combined with quarterly earnings results helped shift sentiment towards more cautious optimism on the economic path ahead, said Craig Fehr, head of investment strategy for Edward Jones.

"Incoming economic data seemed to be signalling some sort of a sweet spot, where we're seeing some cooling in the economy, but not so dramatically so that it's driving renewed recession worries," said Fehr.

Signs of economic slowdown helped lead the Fed to hold rates steady on Wednesday, while also taking a more dovish tone for decisions ahead, he said.

"Markets found some comfort that the Fed didn't go out of its way to emphasize that more rate hikes are preordained."

Meanwhile, the third-quarter earnings results rolling in on both sides of the border show companies are overall still managing to create profits despite the headwinds, he said.

"Better-than-feared earnings expectations have been helpful this week," said Fehr.

On the TSX, Shopify's 21.3-per-cent leap on the day boosted the index, after reporting a big jump in earnings helped lead the information technology index up 6.1 per cent.

There were also big gains for energy stocks, with the index up 2.4 per cent as crude prices also rose, while financials were up 2.9 per cent.

The higher jump for the S&P/TSX composite index compared with U.S. markets was in part related to the rise in crude prices, with the December crude oil contract ending up $2.02 at US$82.46 per barrel, but also in part because the index has lagged in recent months, said Fehr.

"I would say more broadly, the TSX has been a pretty sizable underperformer recently and really for the balance of 2023."

The Canadian dollar traded for 72.58 cents US compared with 72.07 cents US on Wednesday.

The December natural gas contract was down two cents at US$3.47 per mmBTU.

The December gold contract was up US$6 at US$1,993.50 an ounce and the December copper contract was up two cents at US$3.67 a pound.

This report by The Canadian Press was first published Nov. 2, 2023.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Ian Bickis, The Canadian Press