Index has best day of 2023

Photo: The Canadian Press

TORONTO — Canada’s main stock index jumped more than 350 points Friday, driven by gains in energy, industrials, financials and metals. Meanwhile, U.S. stock markets also rose after the latest round of jobs data showed better-than-expected hiring for the month of May even as unemployment rose and wage pressure eased.

The S&P/TSX composite index closed up 352.38 points, or 1.79%, to 20,024.63. It was the largest percentage increase of 2023.

In New York, the Dow Jones industrial average was up 701.19 points, or over 2%, to 33,762.76. The S&P 500 index increased by 61.35 points to 4,282.37,while the Nasdaq composite grew 139.78 points to 13,240.77.

“I think it’s just in some ways an oversold bounce,” said John Zechner, chairman and lead equity manager at J Zechner Associates.

“I mean, you stretch a rubber band too far in one direction, and you’re going to snap it back a little bit the other way at some point.”

The markets have been quite narrow in recent months, said Zechner, noting that on the S&P 500, just a handful of tech giants gained while the rest were down, leading to a flat month for the index.

“Everything that’s been going down lately has been the cyclical stocks … because they’re all worried about an economic downturn,” Zechner said.

But new jobs data seems to have prompted a “complete reversal” of the trend for most of the year so far, with the Nasdaq trailing the other U.S. indexes Friday, said Zechner.

However, it remains to be seen whether Friday’s optimism is “a flash in the pan” or a longer-term move toward cyclicals, he said.

Some investors are still buying into the Goldilocks scenario for the economy, Zechner said, but he doesn’t think that’s the most likely outcome. However, economic data like Friday’s jobs print certainly injects more of that hope into the market, he said.

“Goldilocks was absolutely alive today,” he said.

The Canadian dollar traded for 74.43 cents US compared with 74.17 cents US Thursday.