North American stock markets rose on Wednesday as continued optimism about the strength of the U.S. economy continued. The S&P/TSX Composite Index rose 152.39 points to 24,224.90. In New York, the Dow Jones Industrial Average rose 431 points.
North American stock markets rose on Wednesday as continued optimism about the strength of the U.S. economy continued.
The S&P/TSX Composite Index rose 152.39 points to 24,224.90.
In New York, the Dow Jones Industrial Average rose 431.63 points to hit a record high of $42,512.00. The S&P 500 index rose 40.91 points to 5,792.04, breaking its all-time high set last week, while the Nasdaq Composite Index rose 108.70 points to 18,291.62.
The gains on Wall Street and Bay Street come in conjunction with the situation in China, where the stock market has plunged over the past two days on investor concerns that the Chinese government is not doing enough to stimulate the country’s struggling economy. was a contrast.
Shares in Shanghai fell 6.6% on Wednesday, the worst decline since February 2020, when concerns were growing about the virus emanating from Wuhan and other cities in China. In Hong Kong, the Hang Seng Index fell 1.4%, the biggest decline since the 2008 global financial crisis, after falling more than 9% the previous day.
Concerns about the health of China’s economy sent commodities lower on Wednesday. Gold fell and crude oil slumped after international benchmark Brent crude briefly exceeded $81 a barrel earlier in the week on concerns that escalating tensions in the Middle East could disrupt oil supplies. It continued to decline.
However, while the prospect of weaker demand in China has had a negative impact on commodities, North American markets continue to be buoyed by news originating in the US, with a series of recent reports indicating that the US economy remains stronger than expected. It shows.
John Zechner, chairman of J. Zechner Associates, said market sentiment south of the border is “euphoric” despite facing threats such as the Middle East conflict.
“Surprisingly, compared to what I’ve seen in the past, geopolitics seems to be having less of an impact on markets than it used to,” Zechner said.
“These things seem to have really taken a backseat to the U.S. economy.”
A stronger-than-expected U.S. economy has forced traders to lower their expectations for how far the U.S. Federal Reserve will cut interest rates at its next meeting in November, but the market is now This includes a 25 basis point (bp) rate cut. Then go for a half point cut.
With the economy doing well, there is a growing possibility that major US companies will have strong third-quarter corporate profits.
Zechner said that if third-quarter results show a sharp rise in profits, investors are betting that the U.S. is headed for a “soft landing,” or a situation where inflation falls without sending the economy into recession. He said that trust would increase.
“We know that big tech companies will be fine for a while, as long as they continue to build AI infrastructure at scale,” he said.
“What we want to know is the rest of the economy and what’s going on there. You know, railroad companies, financial, industrial, big consumer companies, car companies, that’s the big challenge. It will be.”
Here in Canada, the energy and mining sector closed with slight gains despite falling commodity prices. Lumber inventories increased as Hurricane Milton neared landfall in Florida, leading to speculation that demand for lumber would increase during the post-hurricane rebuilding period. Interfor rose 5.07% on the day, while West Fraser Timber closed up 4.65%.
The Canadian dollar traded at 73.05 U.S. cents, compared with 73.22 U.S. cents on Tuesday.
The October crude oil contract fell 33 cents to $73.24 per barrel, and the November natural gas contract fell 8 cents to $2.66 per mmBTU.
The December gold contract fell $9.40 to $2,626.00 per ounce, and the December copper contract fell 4 cents to $4.40 per pound.
Zechner said he would closely monitor the release of the next U.S. inflation report, scheduled for Thursday. But in the meantime, the U.S. economy has momentum, he added.
“We seem to be in this sweet spot where everything is going well,” he said.
This report by The Canadian Press was first published Oct. 9, 2024.
– With files from The Associated Press
Companies featured in this article: (TSX:GSPTSE, TSX:CADUSD)
Amanda Stephenson, Canadian Press
