TORONTO – Canada’s main stock index rose 200 points Wednesday amid a broad-based rally led by technology, financials and base metals, while U.S. stock markets also surged higher after the latest inflation report and strong earnings from major American banks.
The Nasdaq composite gained 2.5 per cent, rising 466.84 points to 19,511.23.
The Dow Jones industrial average was up 703.27 points, or 1.7 per cent, at 43,221.55. The S&P 500 index was up 107 points, or 1.8 per cent, at 5,949.91, marking its best day in two months.
In Canada, the S&P/TSX composite index closed up 200.72 points at 24,789.30.
Strong earnings reports from financial companies to start the U.S. earnings season helped kick the day off on a good note, said Ryan Crowther, portfolio manager at ClearBridge Investments.
JPMorgan saw its net income rise 50 per cent in the fourth quarter of 2024, flying past forecasts, while Citigroup, Wells Fargo and Goldman Sachs all reported strong results as well.
However, “the main story of the day was the CPI numbers,” Crowther said, “and the fact that they rose less than expected has the market in somewhat of a relief rally.”
Inflation in the U.S. rose to 2.9 per cent in November from 2.7 per cent, but core inflation declined to 3.2 per cent.
Yields moved lower as markets recalibrated their forecasts for interest rates in 2025, said Crowther, with renewed optimism about inflation moving in the right direction.
“It just helps investors to contemplate the roadmap for rates in 2025,” he said.
However, markets are still pricing in no cut from the U.S. Federal Reserve when it meets later this month, said Crowther.
“We’re back to being able to contemplate the idea of a rate cut later in the year,” he said.
The Fed in December pared back its forecast for cuts in 2025 from four to two, but with job market data remaining stronger than expected, markets had been weighing whether the U.S. might see one or even no cuts this year.
The CPI report also marks a renewed interest in inflation data after a few months’ focus on the job market, he said: “It’s going from being in the conversation to now driving the narrative.”
The Canadian dollar traded for 69.76 cents US compared with 69.58 cents on Tuesday.
The March crude oil contract was up US$2.34 at US$78.71 per barrel and the February natural gas contract was up 11 cents at US$4.08 per mmBTU.
The February gold contract was up US$35.50 at US$2,717.80 an ounce and the March copper contract was up five cents at US$4.39 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Jan. 15, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
