Markets Rally as US Economic Stability Emerges

Stocks advance on signs US economy is holding up

TORONTO — Canadian stocks surged on Monday as investors took heart from signs that the US economy is holding up, despite concerns about the impact of the COVID-19 pandemic.

The S&P/TSX composite index rose 143.56 points, or 0.9 per cent, to 18,441.44, while the TSX 60, which tracks the 60 largest companies on the exchange, gained 1.3 per cent.

The Dow Jones Industrial Average and the S&P 500 both rose around 1.5 per cent, as investors took comfort from a string of positive economic indicators, including a surprise increase in retail sales and a decline in jobless claims.

The US economy has been one of the most resilient in the world during the pandemic, and investors are increasingly optimistic that it can continue to hold up despite the challenges.

“Today’s data is a reminder that the US economy is still in a good place,” said Ian Winer, a strategist at Wedbush Securities. “The retail sales number was particularly strong, and it suggests that consumers are still spending, even in the face of rising COVID-19 cases.”

The Canadian dollar strengthened against the US dollar, rising to 74.73 cents US, as the yield on the 10-year government bond rose to 0.72 per cent.

In corporate news, Canadian National Railway Co. rose 2.5 per cent after the company reported a 12 per cent increase in revenue for the third quarter. The company also said it expects to see a rebound in demand for its services as the economy recovers.

Other notable gainers included Shopify Inc., which rose 3.4 per cent, and Shopify’s largest shareholder, Woodbine Ventures, which rose 2.5 per cent.

The Canadian stock market has been volatile in recent weeks, with the TSX composite index falling by more than 10 per cent in the first week of October. However, the market has stabilized in recent days, and some investors are starting to look for opportunities to buy in on the dip.

“While there are still a lot of uncertainties out there, we think the market is due for a bounce,” said Winer. “We think that the fundamentals are still strong, and that the market will be able to recover once the pandemic is brought under control.”