TORONTO — Canada’s main stock index closed up around 70 points Thursday, with mixed results across sectors, while U.S. markets largely held on to the outsized gains they made the day before.
“Based on what we saw yesterday, and the potential for volatility that we’ve been seeing every day around the inflation story, changes from central banks, and then ultimately, of course, the prospect of a slowing economy … it’s nice to have a day with a little bit of stability,” said Steve Locke, chief investment officer for fixed income and multi-asset strategies at Mackenzie Investments.
Markets in the U.S. especially made major gains Wednesday after Federal Reserve chair Jerome Powell said the central bank could soon start slowing its rate increases.
The Nasdaq composite gained 4.41% Wednesday, while the S&P 500 gained more than 3%, and the Dow more than 2%.
On Thursday, the S&P/TSX composite index was up 72.19 points at 20,525.45.
In New York, the Dow Jones industrial average was down 194.76 points at 34,395.01. The S&P 500 index was down 3.54 points at 4,076.57, while the Nasdaq composite was up 14.45 points at 11,482.45.
“It looks like today’s a bit of a consolidation day,” Locke said.
The Canadian dollar traded for 74.44 cents US compared with 74.03 cents US on Wednesday.
It’s been a volatile year for investors, Locke said.
“This year, we’ve had a lot of big ups and downs. And it relates, of course, to a lot of the macro risk factors that have been dominating the horizon here for investors as we go through this year and into next year.”
Powell’s comments Wednesday didn’t offer new information and confirmed plans for a “restrictive policy” for a little while yet, Locke said.
“That is something that the yield curve has been grappling with … when do we get the peak? When do we get rate cuts?” he said.
Now that the Fed’s path is a little more clear, the yield curve is pricing in its intended rate peak, he said.
Nevertheless, Locke expects elevated volatility to continue in 2023 and cautions investors to ensure their portfolios are diverse.
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