Canada’s main stock index rose on Tuesday as a rally in resource and financial shares helped the market claw back some recent declines ahead of a hotly anticipated Federal Reserve interest rate announcement.
April was the worst monthly performance for the index in over two years as concern rose globally about soaring inflation and rising interest rates. On Monday, the index touched its lowest intraday level in more than two months at 20,456.80
Wall Street’s main indexes also rose on Tuesday as the Fed kicked off its two-day policy meeting. Still, investors were cautious about the central bank’s ability to tame inflation without impeding growth.
“We are seeing a bounce after a pretty lousy April,” said Angelo Kourkafas, investment strategist at Edward Jones. “The probability of a recession still appears low at the moment, but at the same time unless it becomes more clear that inflation is peaking and the yield backup that we have seen stabilizes it might be a little hard to see a very rapid bounce form here,” he said.
The S&P/TSX composite index ended up 213.06 points, or 1%, at 20,905.28.
The TSX energy sector climbed 3.9% despite lower oil prices, with Paramount Resources and MEG Energy Corp leading gains following upbeat corporate earnings.
Oil settled 2.6% lower at $102.41 a barrel on worries that COVID-19 lockdowns in China will depress demand.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 2.3% as SSR Mining Inc jumped 7.5% after the release of first-quarter results.
Heavily weighted financial shares rose 0.9%, while technology ended nearly 1% higher.
Among stocks that lost ground was Restaurant Brands International Inc. The owner of Burger King and Tim Hortons fell 3.5% despite beating estimates for quarterly results.
On Wall Street, investors picked up shares of financials and technology companies ahead of Wednesday’s expected announcement by the Fed.
Nine of the 11 major S&P 500 sectors rose, with energy and financials up 2.9% and 1.3%, respectively. The S&P 500 banks index gained 2%, with Citigroup Inc climbing 2.9%.
Traders see a 99.9% chance of a 50 basis-point hike on Wednesday, according to CME’s FedWatch Tool, which would mark the largest rate hike by the Fed since May 2000.
The spotlight stays on Fed Chair Jerome Powell’s news conference on Wednesday for comments on the future path of interest rates and balance-sheet reduction.
“The number one driver of all the market volatility over the last several months has been the Fed and the Fed hawkish rhetoric, so getting an update from them at a Powell press conference (on Wednesday) [will be] a major catalyst,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.
In April, Wall Street was hammered by uncertainty around the Fed’s ability to engineer a soft landing for the economy, mixed earnings from some big growth companies, the war in Ukraine and pandemic-related lockdowns in China.
The Nasdaq Composite slumped nearly 13.3% last month, its worst monthly performance since October 2008 as richly valued high-growth stocks came under pressure from rising rates.
The Dow Jones Industrial Average rose 67.29 points, or 0.2%, to 33,128.79, the S&P 500 gained 20.1 points, or 0.48%, to 4,175.48 and the Nasdaq Composite added 27.74 points, or 0.22%, to 12,563.76.
The indexes were boosted by stocks including Apple Inc , Tesla Inc and Exxon Mobil Corp, which rose between 0.7% and 2.1%.
Estee Lauder Cos Inc slumped 5.8% after the cosmetics maker cut its full-year profit forecast due to fresh COVID-19 restrictions in China and the Russia-Ukraine crisis.
Hilton Worldwide Holdings Inc slid 4.2% after the hotel operator forecast a bleak full-year profit.
Western Digital Corp jumped 14.5% as the largest percentage gainer on the S&P 500 after activist investor Elliott Investment Management urged the company to separate its Flash business and offered to invest $1 billion to facilitate a sale or a spin-off of the business.
Volume on U.S. exchanges was 11.35 billion shares, compared with the 11.88 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 1.92-to-1 ratio; on Nasdaq, a 1.26-to-1 ratio favored advancers.
The S&P 500 posted 2 new 52-week highs and 32 new lows; the Nasdaq Composite recorded 29 new highs and 195 new lows.
Reuters, Globe staff
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