At midday: TSX hits one-month high after U.S. jobs market data

Canada’s main stock index jumped to its monthly high on Wednesday as soft U.S. jobs market data pushed bond yields down, while investors awaited the minutes from the Federal Reserve’s last policy meeting for its monetary policy outlook.

At 11:08 a.m. ET, the S&P/TSX composite index was up 267.87 points, or 1.22%, at 22,224.25.

Yield on the U.S. 10-year benchmark Treasury note fell 2.4 basis points after the jobs market data. Yield on its Canadian counterpart was last down at 3.556%.

U.S. weekly jobless claims increased last week, indicating easing labour market conditions, while private payrolls increased a bit less than expected in June, consistent with slowing job market momentum.

Separately, services U.S. sector activity slumped to a four-year low in June amid a sharp drop in orders, pointing to loss of momentum by the end of second quarter.

“It’ll also be interesting to see what happens with non farm payrolls on Friday, but today you’re kind of getting a mixed bag of economic numbers”, said Colin Cieszynski, chief market strategist at SIA Wealth Management.

On the Toronto Stock Exchange, materials shares led the sectoral gains with a 3.2% rise, while rate-sensitive utility stocks, climbed 1.3%.

The energy sector was up 1% as oil prices steadied due to a bigger-than-expected drawdown in U.S. crude stockpiles and economic headwinds in China as well as euro zone.

Among individual stocks, Open Text Corp shares surged 1.1% after the company announced a business optimization plan expected to result in the reduction of nearly 1,200 positions.

U.S. stock indexes edged higher on Wednesday in a holiday-shortened trading session, as data pointing to a softening economy raised hopes for a September start to the Federal Reserve’s policy easing.

The equity market will close early on Wednesday and stay shut on Thursday on account of U.S. Independence Day, keeping trading volumes thin throughout the week.

Both the ADP Employment report and weekly jobless claims data pointed to easing labor market conditions, a welcome signal ahead of Friday’s closely watched non-farm payrolls report. Markets hope signs of weakness in the labor market will boost chances of the Fed cutting interest rates.

“It’s quite a strong unemployment claims number, and it’s fitting in with an overall trend that’s probably an indication of loosening up in the jobs market. It must be quite welcoming for the Fed,” said David Morrison, Trade Nation senior market analyst.

Additionally,

PMI data

from the Institute for Supply Management was weaker than expected, and factory orders unexpectedly slumped, strengthening the case for easing policy.

Wednesday’s data prompted market participants to boost bets of a September rate cut to over 70%, as per LSEG’s FedWatch.

The Fed’s June meeting minutes are due later in the day.

Tesla jumped 3.9%, trading at a near six-month high after a more than 10% gain on Tuesday following a smaller-than-expected drop in second-quarter vehicle deliveries.

The Philadelphia SE Semiconductor Index rose 0.5%, helped by gains in the U.S. listing of Taiwan Semiconductor Manufacturing and Broadcom, which rose 2.0% and 1.8%.

However, megacaps Nvidia, Alphabet, Microsoft, and Amazon.com slipped between 0.1% and 1%.

On the other hand, an index of smallcap stocks was 0.4% higher, while the economically sensitive materials and utilities S&P 500 subsectors were up 0.9% and 1.1%.

“The tendency at the moment is towards rotation … we have quite a few days where we see the Russell down, and tech up and vice versa,” Morrison said, though noting that the market’s optimism around megacap tech stocks was still strong.

As the S&P 500 has jumped over 15% in the first half of 2024, largely supported by top-tier high momentum technology-related stocks, the benchmark index’s equal-weighted counterpart only rose 5% and small and mid-cap stocks have significantly lagged.

At 10:06 a.m. ET, the Dow Jones Industrial Average was up 14.44 points, or 0.04%, at 39,346.29, the S&P 500 was up 9.83 points, or 0.18%, at 5,518.84, and the Nasdaq Composite was up 32.02 points, or 0.18%, at 18,060.78.

Among other movers, Paramount Global jumped 10% after Shari Redstone’s National Amusements reached a preliminary deal to sell its controlling interest in the media giant to David Ellison’s Skydance Media.

Lender First Foundation shed 24.7% after the company, which holds a huge portfolio of multifamily real estate loans, disclosed a $228 million unexpected capital raise.

Advancing issues outnumbered decliners by a 3.43-to-1 ratio on the NYSE and by a 1.73-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and three new lows, while the Nasdaq recorded 25 new highs and 65 new lows.

Reuters