(Toronto) Canada’s main stock index closed higher on Wednesday, helped by broad strength in the Toronto market, while Wall Street closed in the green after a positive U.S. inflation report.
The S&P/TSX composite index rose 141.83 points to 22,760.01.
In New York, the Dow Jones industrial average rose 242.75 points to 40,008.39. The S&P 500 index gained 20.78 points to 5,455.21, while the NASDAQ composite index rose 4.99 points to 17,192.60.
Wednesday’s U.S. consumer price inflation report came in as expected, with annual inflation for July hitting its lowest level in more than three years at 2.9%.
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The report, eagerly awaited by nervous investors, ultimately turned out to be a “non-event,” said Greg Taylor, chief investment officer at Purpose Investments.
The tepid stock market reaction showed investors are less concerned about whether high interest rates have kept inflation in check and more concerned about the Federal Reserve’s long wait to cut its benchmark rate and the risks of a recession, Taylor said.
Investors will look at indicators such as payroll data for insight into how the economy is performing, he said.
Markets are pricing in three to four Fed rate cuts this year, with the first expected in September — and some think it could be a 50 basis point cut, Taylor said, especially after last week’s market plunge and a worse-than-expected July jobs report.
“The Fed is trying to sort things out […] “so as not to stimulate inflation and not cause the economy to collapse,” he explained.
Markets are currently pricing in the probability of a 25 basis point rate cut in September at around 65%, according to financial data firm CME Group.
The Dow led Wall Street on Wednesday with a 0.6% gain as a healthy rotation continues away from the big tech stocks that have driven the market this year, Taylor noted.
“Markets are not healthy when they are driven by just a few stocks, and it is much better and stronger in the long run if there is more participation,” he said.
The Canadian dollar was trading at 72.93 US cents on Wednesday compared with 72.87 US cents on Tuesday.
Crude oil fell $1.37 to $76.98 a barrel and natural gas rose seven cents to $2.22 per million BTU.
Gold lost $28.10 to $2,479.70 an ounce and copper lost one cent to $4.03 a pound.