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On Wednesday, Canada’s main stock index, the S&P/TSX Composite Index (TSX: ^GSPTSE), rose by 141.83 points to close at 22,760.01, reflecting broad-based gains across Bay Street.
In the U.S., major stock indices also showed positive movement. The Dow Jones Industrial Average (NYSE: ^DJI) increased by 242.75 points to 40,008.39. The S&P 500 Index (NYSE: ^GSPC) was up 20.78 points, reaching 5,455.21, while the Nasdaq Composite (NASDAQ: ^IXIC) rose 4.99 points to 17,192.60.
The latest U.S. consumer inflation report, showing annual inflation for July at 2.9%—its lowest level in over three years—came in as anticipated. This report was viewed by investors as largely neutral, according to Greg Taylor, Chief Investment Officer at Purpose Investments.
“It was basically in line,” Taylor remarked. “I think this was more validation that things are working.”
The relatively subdued market response indicates that investors are shifting their focus from inflation concerns to potential delays in rate cuts by the U.S. Federal Reserve, which could pose a risk of recession. With markets pricing in three to four rate cuts this year, starting potentially in September, some speculate a substantial cut of 50 basis points might be on the horizon, especially following last week’s market volatility and disappointing July labor report.
“The Fed’s trying to thread the needle ... not to spur on inflation and not to have the economy collapse,” Taylor added.
In commodities, the December gold contract (COMEX: GCZ24) fell by $28.10 to $2,479.70 per ounce, while the September copper contract (COMEX: HGZ24) decreased by a penny to $4.03 per pound.
