S&P/TSX Composite Sees Gains Amidst Declining U.S. Markets

Rosa Saba, The Canadian Press

On Wednesday, Canada’s main stock index, the S&P/TSX composite, experienced a rise, supported by strong performances in telecommunication and utility sectors. In contrast, U.S. stock markets saw a downturn as investors prepared for the upcoming Thanksgiving holiday.

The S&P/TSX composite index ended the day with an increase of 83.16 points, reaching a closing value of 25,488.30.

US Markets Drop Ahead of Thanksgiving

In the United States, the Dow Jones industrial average fell by 138.25 points, settling at 44,722.06. Similarly, the S&P 500 index decreased by 22.89 points to close at 5,998.74, while the Nasdaq composite dropped by 115.10 points, concluding the day at 19,060.48.

According to Anish Chopra, managing director at Portfolio Management Corp, the overall health of the U.S. economy remains strong, with recent data indicating steady growth. "The U.S. economy is doing quite nicely," he stated, noting that inflation is edging closer to the Federal Reserve’s target levels.

Economic Indicators and Investor Behavior

The personal consumption expenditures index, which measures inflation, saw an acceleration to 2.3 percent in October. However, Chopra mentioned that this figure aligns with the expectations set by the Federal Reserve.

Moreover, the U.S. economy showcased growth of 2.8 percent on an annual basis during the third quarter, a figure primarily driven by robust consumer spending and increasing exports.

As the Thanksgiving long weekend approaches, it is common for investors to lock in profits from a strong month, as observed by Chopra. The U.S. markets are set to close on Thursday and will operate for only half a day on Friday.

The tech sector in the U.S. was notably weak, with disappointing earnings from companies like Dell and HP, leading to declines in larger tech firms, such as Nvidia. This loss contributed to the downward trend in the Nasdaq index.

Additionally, Nordstrom also faced a decline in its stock after alerting investors about diminishing sales figures.

Chopra remarked, "There’s some disappointing earnings across a few specific companies. When it’s a bad day in tech, it tends to have an impact on the different indices." However, he emphasized that the overall earnings season has been quite solid and reflects positively in the economic data.

Looking ahead, the market is particularly focused on the policy direction of the incoming government administration, especially concerning the tariffs proposed by president-elect Donald Trump, as these could potentially influence inflation and the timing of future interest rate cuts by the Federal Reserve.

Since September, the Federal Reserve has been in a phase of cutting interest rates, with reductions observed in both September and November, and expectations for another cut in December.

The Canadian dollar rose to 71.25 cents against the U.S. dollar, compared to 71.01 cents the previous day.

In commodities, the January crude oil contract decreased by five cents, settling at US$68.72 per barrel, while the January natural gas contract fell by 27 cents to US$3.20 per mmBTU. The price of February gold increased by US$18.50, closing at US$2,664.80 per ounce, and the March copper contract rose by two cents to US$4.14 per pound.

- With files from The Associated Press

Stocks, Markets, Earnings