S&P/TSX Composite Index up for third straight day, U.S. stock markets also up

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Canada’s main stock index rose for the third day in a row, while US stock markets also rose.

The S&P/TSX Composite Index gained 178.61 points to 19,097.01.

In New York, the Dow Jones industrial average rose 337.12 points to 31,836.74. The S&P 500 index rose 61.77 points to 3,859.11, while the Nasdaq composite rose 246.51 points to 11,199.12.

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Markets are up for the third straight business day on Treasury yields, which were down in the United States and Canada, as well as speculation that aggressive rate hikes will soon abate, said Mona Mahajan, senior investment strategist at Edward Jones.

The Bank of Canada and the Fed are each expected to announce another outsized rate hike, likely to 75 basis points, although a 50 basis point hike is not out of the question for Canada, Mahajan said.

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Markets are also buoyed by earnings which, although still at the start of the season, have so far exceeded expectations, she said.

“We’re seeing profits holding up, the consumer in this story also holding up,” she said. “But I think ultimately? a pause from the Fed would be what really drives a more sustainable rally.

Earnings are a lagging indicator because they don’t represent a company’s current situation, Mahajan noted.

“They probably don’t fully reflect the magnitude of the rate hikes and future rate hikes as well. So there is likely a slowdown in earnings and economic growth ahead of us,” she said. “But I guess the relatively good news is that we’re starting from a better position to absorb some of the potential rate hikes.”

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Looking ahead, she said US tech results will provide insight into how advertising is doing.

The Canadian dollar was trading at 73.32 cents US, compared to 72.88 cents US on Monday.

Mahajan said the US dollar had softened.

“I think the weakness in the US dollar has kind of supported a lot of currencies, especially with major trading partners,” she said.

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The December crude contract rose 74 cents to US$85.32 per barrel and the December natural gas contract rose 41.3 cents to US$6.17 per mmBTU.

The December gold contract was up US$3.90 at US$1,658.00 an ounce and the December copper contract was down 3.4 cents at US$3.40 per pound.

© 2022 The Canadian Press

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