S&P/TSX composite up 1.2%, U.S. markets also climb after promising economic data

TORONTO – Canada’s main stock index gained 1.2 per cent Thursday in a broad-based rally, while U.S. markets also soared to trade near recent record highs.
Markets rose in a broad-based rally on both sides of the border, led by gains in tech with the Nasdaq up 2.3 per cent.
In New York, the Dow Jones industrial average was up 554.67 points at 40,563.06. The S&P 500 index was up 88.01 points at 5,543.22, while the Nasdaq composite was up 401.89 points at 17,594.50.
The S&P/TSX composite index closed up 272.71 points at 23,032.72.
This week, markets are retracting their recent weakness, said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management, as concerns that the central bank has been too slow to cut interest rates ease somewhat.
“There’s optimism coming back into the market,” he said, adding that those fears have been a big factor in recent volatility.
Weakening jobs data had fuelled worries that an economic hard landing was in the cards, but Thursday’s stronger-than-expected report on retail sales helped boost the case for a soft landing, said Burkett.
A good earnings report from Walmart also helped paint the picture of a resilient U.S. consumer, added Burkett.
“Today, you’ve seen economic jitters abate as the Walmart results and the retail economic news (came) in much better than expected,” said Burkett.
The U.S. Federal Reserve is widely expected to start cutting interest rates in September, said Burkett, noting peers like Canada have already begun.
However, the magnitude of upcoming cuts by the Fed and the Bank of Canada is in question, he said, with some betting they could be outsized cuts of 50 basis points.
Markets may be juggling unrealistic expectations for interest rate cuts and economic strength, said Burkett.
“The stock market seems to believe on a day like today that the coast is clear and we’re headed for more positive events in the future,” he said.
“It’s unlikely, in my opinion, that the economy can be strong and equity markets can surge further higher at the same time as interest rate cuts, because if economic data doesn’t reflect the cooling in the economy, it’s too early to cut rates.”
The Canadian dollar traded for 72.91 cents US compared with 72.93 cents US on Wednesday.
The October crude oil contract was up US$1.15 at US$76.99 per barreland the September natural gas contract was down two cents at US$2.20 per mmBTU.
The December gold contract was up US$12.70 at US$2,492.40 an ounce and the September copper contract was up 11 cents at US$4.15 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Aug. 15, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)