By Jeff Sanford

(July 7 – 16:30 ET) – The “Goldilocks” economy continues, but in a down sort of way. Today’s unemployment numbers, which came in so-so, were nevertheless just the right temperature — neither too hot nor too cold — for traders to buy into.

The TSE 300 finished the day up 137.74 points at 10,380.30 while the CDNX finished up 13.16 points at 3,433.76.

Ten of the sub-indices were up, led by industrial products and paper and forest products. On the downside were metals and minerals as well as gold, but only slightly. Advancing issues outnumbered decliners 528 to 495. Volume was light on the day with only 109 million shares trading hands.

Nortel, up $2.30 to $106.20, provided much of the movement for the TSE 300. BCE, which tacked on another 40¢, also helped. Research in Motion ended the day up $6.10 to close at $82. Bombardier, Renaissance Energy, Placer Dome and Abitibi were also up on the day. The S&P TSE 60 ipu was also one of today’s most actives. It tacked on 65¢ to end the day at $62.95. The biggest loser was TD Bank, which saw its stock slide 25¢ to end the day at $35.70.

The Canadian employment numbers came in weaker than the U.S. numbers, leading to speculation that the Bank of Canada may not follow the Fed if it raises rates again at the end of the summer. Though speculation in the U.S. is that, maybe, the Fed won’t raise rates either if the economic news continues to be “perfectly mediocre.”

Markets south of the border definitely bought into lowered expectations about continued Fed tightening today.

That possibility sent the Dow Jones industrial average up 154.51points to end the day at 10,635.98. Bank, retail and biotech shares led a broad advance. Only oil, chemical and drug shares nosed down while chip makers and software stocks continued to rebound after their mid-week pummeling. Home Depot, Wal-Mart and Hewlett-Packard were three of the leaders on the upside. IBM, which had been dragging down the Dow over the last few days, turned around today and helped push on the upside by putting on 3-3/8 points.

The NASDAQ composite was back up over the 4,000 again for the first time since June 22. It ended the day at 4,023.20, a gain of 62.63 points.

The S&P 500 also finished the day up 22.23 points at 1,478.90.

So what happens if market consensus is that the Fed will not raise rates at the end of the summer? According to a Nesbitt Burns report out this morning, a strong summer may be in the offing.

“Financial markets have decided that there is a good chance that the Fed will remain on hold for the remainder of this year. The treasury yield curve is now inverted from the 2-year note through the 30-year bond, and the two-year yield itself is far below the current 6.5% Fed funds rate. The stock market, meanwhile, appears to be getting into the starting blocks for a summer rally,” wrote the authors.