Wall Street ended sharply higher on Tuesday, bouncing back from a multi-day losing streak as a string of upbeat earnings reports and revived economic optimism fueled a risk-on rally. The TSX followed along, with broad-based gains across sectors. Shopify closed at a record high and real estate stocks in Canada had their best day since March.
All three major U.S. stock indexes and the Canadian benchmark gained more than 1%, with the blue-chip Dow, on the heels of its worst day in nine months, leading the charge.
The S&P notched its first advance in four days, and the Nasdaq posted its first gain in six. It was the TSX’s first gain since Thursday.
“It’s a buy-the-dip mentality coming into the market,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
The S&P/TSX Composite index closed up 216.26 points, or 1.10%, to 19,942.71. While economically sensitive sectors saw strong gains - energy stocks rallied 1.42% - the tech sector did even better, rising 2.19%. BlackBerry rose 6.58% and Shopify closed on the TSX at an all-time high of $1,934.94 - a gain of 3.19%. On Friday, National Bank of Canada analyst Richard Tse raised his price target on Shopify to a new Street high of US$2,000.
The TSX real estate sector rose 1.64%, its best day since march.
Enthusiast Gaming Holdings was one of the day’s best performers in Canada, rallying 8.18% after the Globe’s Jennifer Dowty profiled the stock.
On Wall Street, economically sensitive small caps and transports outperformed the broader market.
Benchmark U.S. Treasury yields bounced back from five-month lows, in the wake of their biggest single-session decline since February in the prior session. This helped boost rate-vulnerable banks by 2.9%..
“The economically sensitive stocks are up today,” Carlson added. “When the 10-year (Treasury yield) goes down in a short period of time, that typically doesn’t happen with an economy that’s supposed to be growing. Firming in the 10-year (yield) indicates that perhaps the economy isn’t going to be falling off a cliff.”
Mounting concerns over the highly contagious Delta variant of COVID-19, now responsible for the majority of new infections, have sparked sell-offs in recent sessions as worldwide vaccination efforts gather momentum.
“Things like the Delta variant can certainly impact in the margins,” Carlson said. “It doesn’t take a whole lot of fear in some investors to create what we saw yesterday.”
The Dow Jones Industrial Average rose 592.77 points, or 1.75%, to 34,554.81, the S&P 500 gained 69.64 points, or 1.64%, to 4,328.13 and the Nasdaq Composite added 233.56 points, or 1.64%, to 14,508.54.
All 11 major sectors of the S&P 500 were in positive territory, with financials enjoying the largest percentage gain.
Second-quarter reporting season has hit full-stride, with 56 of the companies in the S&P 500 having posted results. Of those, 91% have beaten consensus, according to Refinitiv.
Analysts now see annual S&P earnings growth of 72.9% for the April-June period, a significant improvement over the 54% growth seen at the beginning of the quarter.
Reuters, with files from Darcy Keith
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