TORONTO — Canada's main stock index gained more than one per cent Friday, led by strength in financial and industrial stocks, while U.S. markets also rallied in the latter half of the afternoon.
The S&P 500 and the Nasdaq each gained 1.6 per cent, while the Dow rose 1.4 per cent, coming back from a midday dip after the latest economic report in the U.S. showed some deceleration in inflation and a pullback in consumer spending in January.
The report is part of a recent trend in the U.S., said Pierre-Benoît Gauthier, vice-president of investment strategy at IG Wealth Management.
“The data is getting weaker and weaker. Everything that comes out is just a big disappointment,” he said.
In part because of the threat of tariffs, “there’s just been a big shift in sentiment,” he said.
However, the weaker data could give the U.S. Federal Reserve leeway to continue cutting its main interest rate at some point later this year, which could help goose the economy.
The Fed has been keeping rates on hold so far this year after cutting them sharply late last year, in large part because of concerns about potentially stubborn inflation.
In New York, the Dow Jones industrial average was up 601.41 points at 43,840.91. The S&P 500 index was up 92.93 points at 5,954.50, while the Nasdaq composite was up 302.86 points at 18,847.28.
The S&P/TSX composite index closed up 265.21 points at 25,393.45.
Next Tuesday, U.S. President Donald Trump is scheduled to enact sweeping tariffs on Canadian goods, while Ottawa has said it will retaliate with tariffs of its own on many American imports.
That shift in sentiment has been felt in the equity market, too, said Gauthier.
“The whole growth story has been put into question.”
The pullback has been felt particularly in tech, where valuations have boomed amid excitement over artificial intelligence technology.
This week, semiconductor giant Nvidia, one of the biggest companies at the heart of the AI rally, reported earnings that beat expectations, as they have been doing quarter after quarter.
But the company’s stock still sank on the news — clearly, the results weren’t enough, said Gauthier. On Friday, Nvidia regained 3.9 per cent.
Meanwhile, in a reversal of economic trends, the latest report on Canadian economic growth surprised to the upside, with fourth-quarter GDP heating up to 2.6 per cent on an annualized basis.
The Canadian economy has been stagnating under the weight of higher interest rates, in contrast to the resilience of the U.S. economy.
However, the data is from before Trump took office, and economists have warned tariffs will weigh on sentiment and spending on both sides of the border.
“We are hopeful that we can get tariffs that are, first of all, below 25 per cent, and second of all, that are temporary,” said Gauthier.
“Everything is riding on the tariff talk next week ... there’s still a lingering feeling in the market that this will get resolved at the last second,” he added.
“I’m not so sure this time.”
The Canadian dollar traded for 69.26 cents US compared with 69.34 cents US on Thursday.
The April crude oil contract was down 59 cents at US$69.76 per barrel and the April natural gas contract was down 10 cents at US$3.83 per mmBTU.
The April gold contract was down US$47.40 at US$2,848.50 an ounce and the May copper contract was down seven cents at US$4.51 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Feb. 28, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
