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The Nasdaq ended at a record high on Tuesday, lifted by Amazon, Microsoft and other top-shelf tech companies as investors shifted their focus to growth stocks.

Microsoft’s stock market value breached $2 trillion for the first time, while Apple, Facebook and Amazon also rallied.

Amazon had over $5.6 billion in total online sales in the United States on the first day of its Prime promotional event, according to Adobe Digital Economy Index.

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In a congressional hearing, meanwhile, Federal Reserve Chair Jerome Powell reaffirmed the U.S. central bank’s intent to encourage a “broad and inclusive” recovery of the job market and not to raise interest rates too quickly based only on the fear of coming inflation.

So-called value stocks, expected to benefit from the economic recovery, have outperformed in 2021, while growth stocks, including major tech names like Apple and Nvidia, have rallied since the Fed last week took a stance on future rate hikes viewed by many as more aggressive than expected.

The S&P growth index has added around 2% since before the Fed last Wednesday projected an accelerated timetable for interest rate increases, compared with a drop of more than 1% in the value index.

“The market was caught off guard regarding the Fed’s hawkish commentary, and that’s 100% of what is happening,” said Andrew Mies, chief investment officer of 6 Meridian. “All the smart people were surprised about how hawkish the Fed was, and now they are adjusting their portfolios.”

Most of the 11 major S&P sector indexes rose, with consumer discretionary and energy among the biggest gainers.

Unofficially, the Dow Jones Industrial Average rose 0.2% to end at 33,945.71 points, while the S&P 500 gained 0.51% to 4,246.46.

The Nasdaq Composite climbed 0.79% to 14,253.27.

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In Toronto, the S&P/TSX composite index unofficially closed up 44.29 points, or 0.22%, at 20,200.65

Tech stocks also led gains, finishing 1.3% higher. BlackBerry Ltd. rose 4.6%, while Kinaxis Inc. and Dye & Durham Ltd. increased 2.5% and 2.1%, respectively

Energy stocks fell 0.5% with crude oil prices settling slightly lower on Tuesday after Brent rose above $75 a barrel for the first time in over two years, as OPEC+ discussed raising oil production.

Brent crude futures settled down 9 cents to $74.81 a barrel after hitting a session high of $75.30 a barrel, the strongest since April 25, 2019.

U.S. West Texas Intermediate (WTI) crude fell 60 cents, or 0.8%, to $73.06 a barrel.

The Canadian dollar rose for a second day against its broadly weaker U.S. counterpart on Tuesday, as investor sentiment strengthened after it was weakened last week by a hawkish shift in guidance from the Federal Reserve.

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The loonie was trading 0.4% higher at 1.2310 to the greenback, or 81.23 U.S. cents. On Monday, it touched its weakest level since April 26 at 1.2485 before recovering to end up 0.8%, its biggest gain in nearly seven weeks.

“It’s a broad U.S. dollar move again today,” said Erik Bregar, head of FX strategy at the Exchange Bank of Canada. “I think that’s very much because risk sentiment is on the up and up again.”

The Nasdaq hit an intra-day record high and copper prices

rebounded from 10-week lows. Canada is a major exporter of commodities, including oil and base metals, which have benefited from Fed stimulus.

Last week, the Fed projected it would begin hiking interest rates in 2023 rather than in 2024, rattling financial markets.

“Everything is calming down a bit this week,” Bregar said.

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Reuters

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