S&P/TSX composite posts small gain, U.S. markets also higher

TORONTO – Canada’s main stock index posted a small gain on Monday, helped higher by energy and base metal stocks, while U.S. markets also eked out gains, with the Dow and the S&P 500 adding to recent new record highs.
The mood Monday was one of tentative optimism, said Brian Madden, chief investment officer with First Avenue Investment Counsel.
Markets tilted higher after a week that saw a much-anticipated outsized interest rate cut from the U.S. Federal Reserve, after months of speculation. Markets rallied the day after the cut and hit new records.
“I think what we’re seeing is validation on the part of investors,” Madden said, adding that there’s increasing confidence the U.S. economy will continue to grow and the soft landing will support corporate earnings and stock prices.
Markets have two more cuts priced in for the rest of the year, said Madden.
The S&P/TSX composite index closed up 27.34 points at 23,894.71.
In New York, the Dow Jones industrial average was up 61.29 points at 42,124.65. The S&P 500 index was up 16.02 points at 5,718.57, while the Nasdaq composite was up 25.95 points at 17,974.27.
This week will bring reports on U.S. GDP and the Personal Consumption Expenditures index, said Madden. Those reports will be under the magnifying glass, he said.
Despite some softening in the labour market, consumer spending has held up likely in part because of pandemic-era savings, he said.
“It is probably true that consumption has held out better than you might have expected given the underlying conditions in the labour market.”
On Monday, a report suggested that U.S. business activity isn’t growing as fast as economists expected, driven mainly by manufacturing.
Looking further ahead, markets are staring down the next round of earnings and a looming U.S. election, which so far appears quite close, said Madden.
“There could be volatility, without a doubt,” he said, adding that any extra uncertainty, such as if the election results are contested, will only add to that.
“Markets — it’s a cliché, but it’s true — they hate uncertainty,” he said.
This Friday will also bring the latest GDP report in Canada, where the economy and labour market have slowed faster than they have in the U.S. under the weight of interest rate hikes. The Bank of Canada has already cut rates three times this year.
The Canadian dollar traded for 74.02 cents US, compared with 73.72 cents US on Friday.
The November crude oil contract was down 63 cents at US$70.37 per barrel and the November natural gas contract was up 13 cents at US$2.85 per mmBTU.
The December gold contract was up US$6.30 at US$2,652.50 an ounce and the December copper contract was up a penny at US$4.35 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 23, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)