TSX jumps on Fed rate cut bets

Investing.com - Canada’s main stock exchange climbed at the start of a holiday-shortened week on Tuesday, suggesting that investors were looking to take some profits following steep declines in the prior session.

Toronto Stock Exchange’s S&P/TSX composite index was up 2.03% or 550 points at 27,570.08.

On Friday, the average slipped by 0.9%, its sharpest fall since April and an extension to a pullback from recent record highs. For the week, the TSX dropped by 1.7%.

U.S. stocks ends lower

U.S. stock index  edged broadly higher Tuesday, pointing to a continued recovery on Wall Street.

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell about 62, or 0.1%, the S&P 500 index fell 0.4%, and the NASDAQ Composite fell 0.7%.

The main averages surged on Monday, recovering from a deep sell-off at the end of last week sparked by trade developments and soft U.S. employment numbers.

Fed rate cut hopes boost sentiment

Sentiment has recovered this week after all three indices dropped last week as new tariff announcements by U.S. President Donald Trump rattled investors, while a weaker-than-expected nonfarm payrolls data further dented optimism.

Trump lodged a fresh tariff threat on Monday, saying he would "substantially" raise levies on Indian goods over the country’s purchases of Russian oil.

However, investors have been boosted by optimism that this weak data will prompt the Federal Reserve to cut interest rates next month, with markets assigning roughly 90% odds of a September rate cut, according to the {CME FedWatch}, versus roughly 63% a week ago.

The economic data calendar is headlined Tuesday by a measure of activity in the U.S. services sector, with the Institute for Supply Management’s non-manufacturing purchasing managers’ index is seen inching up to 51.5 in July from 50.8 in the prior month.

A level above 50 indicates expansion, although the ISM associates a PMI mark above 49 over time with overall economic growth. Services represent a critical portion of the U.S. economy, accounting for more than two-thirds of activity.

Palantir impresses

A relatively solid second-quarter reporting period -- along with sanguine tariff commentary from some company executives -- has also bolstered Wall Street.

The likes of Advanced Micro Devices (NASDAQ:AMD), Rivian Automotive (NASDAQ:RIVN) and Caterpillar (NYSE:CAT) are scheduled to report results later in the session, while Wednesday will bring results from Walt Disney (NYSE:DIS), McDonald’s (NYSE:MCD) and Uber (NYSE:UBER).

Elsewhere, Palantir Technologies (NASDAQ:PLTR) shares soared premarket, building on a 4% gain during the day, after the defense tech firm reported quarterly revenue topping $1 billion for the first time.

The White House’s drive to encourage the widespread adoption of AI -- as well as the Pentagon’s move to buy more software from "non-traditional" providers -- has also powered returns at the data analytics and defense software group.

Shares of Hims and Hers Health fell before U.S. markets opened after reporting quarterly revenue that fell short of estimates.

Crude adds to recent losses

Oil prices slipped lower Tuesday, adding to recent losses in the wake of OPEC+ agreeing another large output hike despite an uncertain demand outlook.

At 12.05 ET, Brent futures slipped, and U.S. West Texas Intermediate crude futures fell 0.84% to $68.17 per barrel.

Both benchmarks fell more than 1% in the previous session, their fourth consecutive decline, to settle at their lowest in a week.

The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, agreed on Sunday to raise oil production by 547,000 barrels per day for September.

It marks a full and early reversal of the group’s largest tranche of output cuts, amounting to about 2.5 million bpd, or around 2.4% of global demand.

Gold retreats

Gold prices inched down, consolidating after three days of gains, underpinned by growing expectations that the Federal Reserve will deliver a rate cut in September amid U.S. economic concerns and intensifying trade tensions.

Spot Gold was 0.5% lower at $3,356.13 an ounce, while Gold Futures for December were also down 0.5% at $3,409.85/oz.

Bullion has risen in the last three consecutive sessions, with an over 2% jump on Friday after the release of U.S. nonfarm payrolls data.