Inflation and jobs data boost market confidence
U.S. and Canadian stock indexes closed at record highs on Thursday as fresh inflation and labor market data fueled investor expectations that the Federal Reserve will cut interest rates at its upcoming meeting. The benchmark U.S. 10-year Treasury yield dipped below 4% for the first time in five months, closing at 4.015%.
The August Consumer Price Index rose 0.4% month-over-month and 2.9% year-over-year, slightly above expectations. Despite the higher numbers, markets reacted positively, interpreting the data as mild enough to justify a rate cut, especially after a weaker Producer Price Index report the day before.
Unemployment claims surged to 263,000, well above forecasts and the highest in months, reinforcing the view that the labor market is cooling. Analysts believe this combination of rising joblessness and moderate inflation supports at least a 25 basis point cut, with futures markets pricing in a small chance of a deeper 50 point reduction.
Indexes rally across the U.S. and Canada
The S&P 500 climbed 0.85% to a record 6,587.47. The Nasdaq rose 0.72% to 22,043.08, and the Dow Jones Industrial Average gained 1.36% to close at 46,108.00, also a record. In Canada, the S&P/TSX composite index advanced 0.8% to a historic 29,407.89 close.
Tesla shares jumped 6%, contributing to the S&P 500 and Nasdaq gains. The Philadelphia SE Semiconductor Index added 0.9%, while Micron Technology surged 7.5% following a Citigroup upgrade. Warner Bros Discovery soared 29% on buyout rumors involving Paramount Skydance.
Sector performance and company standouts
In the U.S., ten of eleven S&P 500 sectors posted gains. Materials led with a 2.14% increase, followed by health care at 1.73%. Centene jumped 9% after reaffirming its earnings outlook. Consumer discretionary rose 1.4%, bolstered by Magna International’s 2% gain after naming a new CFO.
Oracle dropped 6.2%, retreating slightly after its 36% surge the prior day. Delta Airlines also fell 1.55% after reiterating its annual profit forecast. Advancing stocks dominated the S&P 500, with a 6.8-to-1 lead over decliners. The Nasdaq recorded 143 new highs, with total trading volume at 18.2 billion shares.
Canadian momentum fueled by LNG and construction
Canada’s gains were driven by natural gas expansion plans. Prime Minister Mark Carney announced a plan to double LNG production at the Shell-led plant in British Columbia, aiming to boost job creation and attract foreign investment. Shares in Aecon Group jumped 9.6%, while Bird Construction rose 6.9%.
Industrials gained 1.6%, financials 1%, and natural gas producers also saw strength. The announcements signaled Canada’s intent to reduce its reliance on the U.S. and diversify its economy.
