Canada’s stock market gained ground Tuesday, while major U.S. indexes were mixed.
“It feels like generally, the momentum has been moving away from mega-cap tech and AI more into the cyclical parts of the market,” said Mona Mahajan, head of investment strategy at Edward Jones.
“I think Canadian equities have benefited on both sides of the equation. On days when areas like energy and materials are strong, Canada has an overweight concentration in those areas and on days where areas like tech are strong, they can continue to show some stability and move higher.”
Helping to push the technology sector higher was Shopify Inc., which gained 7.4% on the day and is scheduled to report financial results for the fourth quarter on Wednesday.
With more corporate earnings coming this week, Mahajan said she expects to see similar trends across companies in Canada and the U.S.
“For the full year, we expect double-digit earnings growth for the TSX as well as the S&P 500,” she said.
“Similarly, we think Canada’s earnings growth will be broad-based, driven potentially again by some of those materials … but should see positive earnings growth across several sectors. In the U.S., we expect the same — positive earnings growth in tech and non-tech parts of the market.”
The S&P/TSX composite index was up 233.51 points at 33,256.83.
In New York, the Dow Jones industrial average was up 52.27 points at 50,188.14. The S&P 500 index was down 23.01 points at 6,941.81, while the Nasdaq composite was down 136.20 points at 23,102.48.
Meanwhile, U.S. investors sifted through the latest retail sales figures that came in below expectations.
U.S. retail sales were flat in December from November, when business was up 0.6%, according to the U.S. Commerce Department. Economists were expecting a 0.4% increase for December.
That could signal a loss of momentum for overall spending by American households, which is the main engine of the economy.
Following Tuesday’s disappointing report on sales at U.S. retailers, traders upped bets that the U.S. Federal Reserve could cut interest rates three times or more this year, according to data from CME Group. Most still see two cuts as more likely.
“I do think we are seeing bond yields sell off after the retail sales news,” Mahajan said.
“Perhaps an indication that the Fed may be more inclined to bring interest rates lower if they see this one print turn into a trend. Now, keep in mind this is just one data point.”
One of the reasons the U.S. stock market has remained close to records is the expectation that the Fed will continue cutting interest rates later this year. Lower rates can give the U.S. economy a boost, though they can also worsen inflation.
The Canadian dollar traded for 73.83 cents US compared with 73.66 cents US on Monday.
The March crude oil contract was down 40 cents US at US$63.96 per barrel.
The April gold contract was down US$48.40 at US$5031.00 an ounce.
— With files from The Associated Press