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S&P/TSX composite inches higher, U.S. stock markets rally to record highs

The S&P TSX composite index screen at the TMX Market Centre in Toronto is photographed on Friday, Nov.11, 2022. THE CANADIAN PRESS/ Tijana Martin

TORONTO — Strength in technology and utility stocks helped Canada's main stock index inch higher Wednesday, while U.S. stock markets rallied to new record highs after a pair of reports on inflation and retail sales. 

“All eyes were on inflation this morning,” said Danick Dutrisac, vice-president and portfolio manager at Fiduciary Trust Canada. 

The U.S. inflation report came in slightly lower than expected, said Dutrisac. That’s likely good news for the U.S. Federal Reserve, he added. The central bank has been holding its key interest rate steady as the economy remains resilient, so any data that indicates cooling gives investors hope for cuts in the future. 

Markets have reacted positively to the report, Dutrisac said, particularly in rate-sensitive sectors like real estate and technology. 

In New York, the Dow Jones industrial average was up 349.89 points, or 0.9 per cent, at 39,908.00. The S&P 500 index was up 61.47 points, or 1.2 per cent, at 5,308.15, while the Nasdaq composite was up 231.21 points, or 1.4 per cent, at 16,742.39.

The S&P/TSX composite index closed up 41.42 points at 22,284.76.

Investors have been recalibrating their expectations for how many cuts the U.S. central bank could make this year. But more data is needed to “firmly establish a timeline,” Dutrisac added. 

“If we see this kind of consistent pattern continue ... it will be more and more likely as time goes on.” 

However, the closer it gets to the November U.S. election, the longer investors may have to wait, said Dutrisac, as the Fed likely won’t want to lower rates around that time. 

Wednesday also brought a weaker-than-expected report on U.S. retail sales, another piece of good news for the Fed and for those hoping for cuts, said Dutrisac.

“These two points are a step in the right direction,” he said. 

The U.S. economy has been more resilient than expected under the weight of higher interest rates, leading the market to significantly pare back its expectations for cuts this year. 

In Canada, meanwhile, lower rates are likely around the corner. Dutrisac said the central bank is likely also relieved to see the softer data coming out of the U.S.

“The Bank of Canada is certainly welcoming what's happened south of the border today.”

Meanwhile, so-called "meme stocks" that saw a resurgence earlier in the week, like GameStop, were among the U.S. market's few losers Wednesday. 

The Canadian dollar traded for 73.45 cents US compared with 73.24 cents US on Tuesday.

The June crude oil contract was up 61 cents at US$78.63 per barrel and the June natural gas contract was up eight cents at US$2.42 per 1,000 cubic feet.

The June gold contract was up US$35 at US$2,394.90 an ounceand the July copper contract was up three cents at US$4.92 a pound.

-- With files from The Associated Press

This report by The Canadian Press was first published May 15, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD) 

Rosa Saba, The Canadian Press

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