Canada’s main stock index rose nearly 500 points on Wednesday, while U.S. markets lost some steam after the release of U.S. Federal Reserve minutes.
“Ever since the Fed meeting minutes came out, we seem to have hit a bit of a slump,” said Michael Currie, senior investment advisor at TD Wealth.
The minutes showed many U.S. central bank officials want to see inflation fall further before they would support additional interest rate cuts this year. Lower rates can give a boost to the American economy and prices for investments, but that comes at the cost of potentially worsening inflation.
“The main talk is that they’re saying there were some new members of the committee this time, and there’s definitely some dissension,” Currie said.
The Dow Jones industrial average was up 129.47 points at 49,662.66. The S&P 500 index was up 38.09 points at 6,881.31, while the Nasdaq composite was up 175.25 points at 22,753.64.
Nvidia climbed 1.6% after Meta Platforms announced a long-term partnership where it will use millions of chips and other equipment from Nvidia for its artificial-intelligence data centres.
That performance demonstrated the upside of AI development for the U.S. stock market. But investors have also focused on the potential downsides recently, which has led to sharp swings for Wall Street. Worries are rising, for example, about how much companies like Meta are spending on AI and whether they can make back their huge investments through higher profits and productivity in the future.
Meta’s stock fell as much as 1.7% before recovering and rising 0.6%.
Another worry is that if AI succeeds in creating tools to do complicated tasks more cheaply, companies in industries as far flung as software and legal services and trucking logistics could see their businesses get undercut.
That has pushed investors to suddenly and aggressively punish stocks of companies seen as under threat, and analysts have likened it to a “shoot first-ask questions later” mentality.
Meanwhile, the Canadian stock market was helped by gains in the technology and basic materials sectors.
The S&P/TSX composite index was up 493.18 points at 33,389.73.
Shopify Inc. shares rose 7.6% and added the most points to the TSX on Wednesday.
Currie said Shopify is a “massive part of the index.”
He also pointed to shares of Bombardier Inc., which rose 5.89%.
“A little bit of that is tied to the defence stocks doing very well today, although we don’t always think of Bombardier as a defence stock,” he said.
The Canadian dollar traded for 73.11 cents US compared with 73.23 cents US on Tuesday.
The April crude oil contract was up US$2.79 at US$65.05 per barrel.
The April gold contract was up US$103.60 at US$5,009.50 an ounce.
— With files from The Associated Press