U.S. stocks rise on Fed cut bets; earnings continue to flow
Investing.com - Canada’s main stock exchange was trading higher on Wednesday, underpinned by bets on further Federal Reserve interest rate cuts this year and a spike in metals prices.
The S&P/TSX composite jumped 283 point or 0.93% at 30,637.12.
Index climbed by 1.7% to end at 30,353.61 on Tuesday, recovering from sharp declines notched in its prior session on Friday. The market was shuttered on Monday in observance of Canada’s Thanksgiving Day holiday.
U.S. stocks higher
U.S. stock index also traded higher, as investors digested dovish remarks from Powell ahead of the release of eagerly-awaited corporate earnings.
At 4:00 p.m. ET (20:00 GMT), Dow Jones Industrial Average fell 17 points, or 0.04%, S&P 500 rose 0.4%, and NASDAQ Composite climbed 0.7%.
The main averages on Wall Street closed in mixed fashion on Tuesday, largely recovering from losses earlier in the session.
Analysts suggested that the rebound was fueled by mostly upbeat sentiment around a crush of bank earnings and solid figures from firms in other sectors.
Elsewhere, Powell said, during a speech at the National Association for Business Economics, that the outlook for employment and inflation “does not appear to have changed much” since the Fed’s September meeting. He signaled that the U.S. economy may be on a firmer trajectory than some expected, but cautioned that a notably softer labor market is emerging.
The comments were broadly interpreted by investors as a sign that more rate reductions this year -- after a 25-basis point drawdown in September -- remained on the table.
With the economic data front largely quiet because of a prolonged U.S. government shutdown, much of the focus will be on the Fed’s Beige Book on Wednesday.
The report, which gathers together anecdotal evidence of the state of the American economy, comes as the shutdown forces policymakers and investors to seek out alternative data sources.
U.S.-China tensions remain fraught
Powell’s statements helped soothe markets that had been roiled by the renewed U.S.-China trade dispute.
Tensions escalated further this week as Trump floated cutting off trade ties with China in the cooking‐oil space, accusing Beijing of “purposefully not buying” U.S. soybeans and describing the move as an “economically hostile act.”
At the same time, China has targeted U.S.-linked units of the South Korean shipbuilder Hanwha Ocean, sanctioning five subsidiaries in what observers view as retaliation over a U.S. probe of China’s shipbuilding dominance.
Both nations initiated reciprocal port fees on vessels tied to the other side, adding maritime pressure to the trade battle.
Gold tops $4,200
Against this backdrop, gold surged above $4,200/oz for the first time.
Spot gold last traded 1.3% higher at $4,197.04 per ounce as of 06:09 ET (10:09 GMT), after notching an all-time high of $4,200.11 earlier in the session. U.S. December Gold Futures jumped 1.2% to $4,213.54.
Bullion has gained for the last eight consecutive weeks, and was on pace for yet another weekly increase. Gold is now tipped by the Yardeni analysts to reach $5,000/oz next year.
Oil steadies
Crude prices steadied after the previous session’s losses in the wake of the International Energy Agency warning of a supply surplus in 2026.
Brent futures gained 0.1% to $62.43 a barrel, and U.S. West Texas Intermediate crude futures rose 0.2% to $58.83 a barrel.
Both benchmarks closed at five-month lows in the previous trading session.
The International Energy Agency said on Tuesday the global oil market could face a surplus next year of as much as 4 million barrels per day, a bigger glut than it had earlier forecast.
Bank earnings continue, along with United Airlines
A bevy of companies are now due to report their latest results on Wednesday, opening the floodgates on the third-quarter earnings season.
Among those is United Airlines (NASDAQ:UAL), which is set to announce its latest figures after the closing bell on Wall Street on Wednesday, with investors keen to see how the carrier expects travel demand to evolve over the rest of the year.
Major lenders Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS), as well as pharmaceutical firm Abbott Laboratories (NYSE:ABT), will also highlight today’s earnings agenda.
Earnings from major U.S. banks began rolling in on Tuesday.
Goldman Sachs (NYSE:GS) beat expectations, boosted by strong investment banking fees, while JPMorgan Chase (NYSE:JPM) raised its full‐year net interest income forecast after a robust quarter.
Wells Fargo (NYSE:WFC) also posted a profit beat, aided by higher deal activity and improved credit performance.