A screen displaying the S&P/TSX composite index at the TMX Market Centre in downtown Toronto is shown in a photo taken on Friday, November 11, 2022. (THE CANADIAN PRESS/Tijana Martin)
Canada’s stock market closed with strong gains on Friday, rising over one percent as financial and industrial stocks led the charge. U.S. markets followed suit, rebounding in the afternoon with notable increases across major indexes.
The S&P 500 and Nasdaq both climbed 1.6 percent, while the Dow Jones rose 1.4 percent. Earlier in the day, stocks dipped following a U.S. economic report revealing slowing inflation and a decline in consumer spending for January. This data is part of a broader pattern of weakening economic indicators, according to Pierre-Benoît Gauthier, vice president of investment strategy at IG Wealth Management.
“The data keeps getting worse. Every new report is a disappointment,” said Gauthier. He also pointed to the uncertainty caused by looming tariffs as a factor in market sentiment shifts.
However, weaker economic data may push the U.S. Federal Reserve toward cutting interest rates later this year. The Fed had previously reduced rates sharply but has since held steady due to inflation concerns. A rate cut could help stimulate economic growth.
Market Numbers at Close
- Dow Jones: Up 601.41 points to 43,840.91
- S&P 500: Up 92.93 points to 5,954.50
- Nasdaq: Up 302.86 points to 18,847.28
- S&P/TSX Composite Index: Up 265.21 points to 25,393.45
Tariffs Set to Shake Markets
On Tuesday, U.S. President Donald Trump plans to impose broad tariffs on Canadian goods, and Canada has vowed to respond with its own tariffs on American imports. This development has rattled investors, with Gauthier noting that the overall outlook for growth has been called into question.
The tech sector, a major driver of recent market gains, has been hit particularly hard by shifting investor sentiment. Chipmaker Nvidia, a leader in artificial intelligence-driven stock rallies, exceeded earnings expectations again this quarter. Yet, despite strong financial results, its stock initially declined—suggesting that investors may have set the bar too high. However, Nvidia regained 3.9 percent by Friday’s close.
Canadian Economy Defies Expectations
While the U.S. economy shows signs of slowing, Canada’s latest GDP report offered a surprise, revealing annualized fourth-quarter growth of 2.6 percent. This is a stark contrast to the recent stagnation caused by high interest rates.
However, experts warn that upcoming tariffs could dampen economic momentum in both countries. “Everything hinges on tariff talks next week,” Gauthier said. “There’s still hope for a last-minute resolution, but I’m not convinced this time.”
Currency & Commodities
- Canadian Dollar: 69.26 cents US (down from 69.34 cents US)
- Crude Oil: Down 59 cents to US$69.76 per barrel
- Natural Gas: Down 10 cents to US$3.83 per mmBTU
- Gold: Down US$47.40 to US$2,848.50 per ounce
- Copper: Down seven cents to US$4.51 per pound
