TORONTO – Canada’s main stock index crept higher Wednesday thanks to strength in energy stocks, while U.S. stock markets were mixed, recovering from larger losses earlier in the day ahead of earnings from Nvidia expected after the bell.
The S&P/TSX composite index closed up 25.69 points at 25,036.46.
In New York, the Dow Jones industrial average was up 139.53 points at 43,408.47. The S&P 500 index was up 0.13 points at 5,917.11, while the Nasdaq composite was down 21.33 points at 18,966.14.
Earnings were the main driver for markets Wednesday, said Mona Mahajan, senior investment strategist at Edward Jones.
Target’s share price fell more than 21 per cent after reporting weaker profit and revenue than expected, and giving a lower-than-expected profit forecast for the upcoming holiday season.
“I do think the Target news was surprising,” said Mahajan, adding it was in “sharp contrast” to a strong report from Walmart the day before.
“They do say that they’ve seen some continued consumer caution overall, but I think they also might have misjudged some of their demand profile there,” she said.
Markets seem to be treating Target’s report as largely company-specific, said Mahajan, “but we’ll be keeping an eye out on whether that continues throughout the industry.”
Some discount retailers saw their share prices move lower as well on Wednesday, with Dollar General down 4.2 per cent and Dollar Tree down 2.6 per cent.
After a broad rally year to date, expectations for earnings have grown substantially, said Mahajan. When companies miss those expectations, investors will question whether their share price is worth it, she said: “It does feel like the risk-reward around earnings has gotten tougher.”
Perhaps the biggest event of the earnings season came after the bell, when semiconductor giant Nvidia — a key driver of this year’s rally — reported. The company posted a beat on the top and bottom line for its third quarter.
The artificial intelligence “darling” has benefited substantially from companies’ investments in the AI space, said Mahajan, and its stock is up more than 200 per cent so far this year.
“It does feel like folks will be listening to every word that they say about not only this past quarter, but what’s going to happen going forward,” she said, as investors look beyond the massive amounts of spending companies have been doing in the AI space and hope that it bears fruit.
Thursday’s markets will likely be driven by Nvidia’s results, Mahajan said.
Markets are overall grappling with uncertainty this week though, she added, over geopolitical tensions such as the Russia-Ukraine war, but also over potential policies from incoming U.S. president Donald Trump.
Coming off of a hefty rally that followed the election, investors are now a little more cautious, she said, with bond yields rising as markets price in slower interest rate cuts due to the potentially inflationary policies promised by Trump.
The Canadian dollar traded for 71.54 cents US, according to XE.com, compared with 71.53 cents US on Tuesday.
The January crude oil contract was down 49 cents at US$68.75 per barrel and the December natural gas contract was up 19 cents at US$3.19 per mmBTU.
The December gold contract was up US$20.70 at US$2,651.70 an ounceand the December copper contract was up two cents at US$4.16 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Nov. 20, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
