The TSX, S&P 500 and the Dow hit record highs on Friday, while megacap growth stocks drove a recovery on Nasdaq after U.S. jobs data eased concerns over prospects for rising rates.
The Canadian benchmark rose nearly a full percentage point in a broad advance across sectors. The S&P/TSX Composite Index gained 181.77 points to 19,472.74. Most sectors gained more than 1%, although financials lagged slightly, rising 0.38%.
Centerra Gold led decliners, plunging nearly 30% after Kyrgyzstan’s parliament passed a law allowing a temporary takeover of the Kumtor gold mine, which is operated by the Canadian company. Pot company Tilray was among the biggest gainers, rallying 14.44% after an analyst at Jefferies upgraded its rating by two notches to a “buy.”
U.S. job growth unexpectedly slowed in April, likely restrained by shortages of workers, the Labor Department report on Friday showed. Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, the Labor Department reported. Economists polled by Reuters had forecast payrolls advancing by 978,000 jobs.
The report alleviated some concerns about rising inflation and potentially higher U.S. interest rates, which some investors worry would hurt growth companies with high valuations.
Jobs figures in Canada were also lacklustre - although that was largely anticipated by market participants as the third wave of COVID-19 and tighter restrictions led to another round of layoffs.
The Canadian economy lost a net 207,000 workers last month, undoing some of the 303,000 gain in March, Statistics Canada said Friday. The unemployment rate rose to 8.1 per cent from 7.5 per cent. All told, Canada has recovered about 83 per cent of its pandemic job losses.
“Growth names that were taken to the woodshed are getting another chance, because they will be perceived to be less risky in an environment where there is a slower recovery, and that’s really what the jobs data is indicating,” said Tom Martin, senior portfolio manager at Globalt Investments.
Heavily-weighted growth stocks such as Microsoft Corp , Apple Inc and Alphabet all rose, but all major S&P 500 sectors also ended in green, with energy and real estate leading the advance. Energy and materials hit fresh highs earlier.
Unofficially, the Dow Jones Industrial Average rose 227.91 points, or 0.66%, to 34,776.44, the S&P 500 gained 30.81 points, or 0.73%, to 4,232.43 and the Nasdaq Composite added 119.40 points, or 0.88%, to 13,752.24.
“The anticipation and confirmation of (Federal Reserve) policy staying the same and continued economic recovery with vaccines rollout have fueled these all-time highs, but we do believe the volatility is going to be tightened in the short term,” said Greg Bassuk, chief executive at Axs Investments.
A raft of upbeat earnings also helped stocks, and S&P 500 earnings are now estimated to have increased 50.4% in the first quarter from a year ago, which would be the highest growth rate since the first quarter of 2010, according to Refinitiv data.
U.S. Treasury yields fell to two-month lows on Friday after data showed a much smaller-than-expected jobs gain in April, but later bounced higher, with yields on longer-dated debt rising for the session.
The benchmark 10-year yield, which dropped to 1.469%, the lowest since March 4, was up 1.6 basis points at 1.5771% by late afternoon, holding below a 14-month high of 1.776% reached on March 30.
The yield drop was a “knee-jerk reaction” that faded as the session wore on and the market digested the data, according to analysts.
“Despite a huge miss, which it was, it’s still employment going in the right direction,” said Andrew Richman, senior fixed income strategist at Sterling Capital Management.
Oil edged up slightly on Friday even as the COVID-19 crisis in India worsened, and prices notched a second weekly gain against the backdrop of optimism over a global economic recovery.
Brent crude futures ended the session at $68.28 a barrel while U.S. West Texas Intermediate (WTI) crude settled at $64.90 a barrel, both up 19 cents, or 0.3%.
The two benchmarks rose by more than 1% on the week, their second consecutive weekly gain, as easing COVID-19 restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.
MSCI’s benchmark for global equity markets rose 0.86% to 710.17. Europe’s broad FTSEurofirst 300 index added 0.84% to close at 1,712.4. Both indexes set new highs.
U.S. gold futures settled up 0.9% at $1,831.30 an ounce.
Aluminum prices approached levels last seen in 2018 and copper hit an all-time high as investors bet on a rapid global recovery from the pandemic, led by the United States. Iron ore futures also vaulted to a record high.
Copper prices have soared 135% since the lows of last March when the emerging COVID-19 pandemic and lockdown hit demand. The metal has been propelled by forecasts of surging demand spurred by a green revolution of electric vehicles and renewable energy that will require more of a metal that is a strong conductor of electricity.
Benchmark copper on the London Metal Exchange Friday broke above the previous record high of US$10,190 set in 2011 to $10,435.
On the TSX, shares of both HudBay Minerals and First Quantum Minerals rose more than 6%,
Read more: Stocks that saw action on Friday - and why
With files from Reuters
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Darcy Keith