TORONTO — Canada's main stock index closed up more than 175 points, alongside gains in the U.S. markets, ahead of Canadian inflation data due out on Wednesday.
The S&P/TSX composite index was up 177.16 points at 18,798.18.
In New York, the Dow Jones industrial average was up 337.98 points at 30,523.80. The S&P 500 index was up 42.03 points at 3,719.98, while the Nasdaq composite was up 96.60 points at 10,772.40.
John Zechner, chairman and lead equity manager at J Zechner Associates, said Tuesday’s small rally feels like déjà vu, as the markets have been up and down on a daily basis for weeks now.
Early earnings reports from the U.S. banks, especially the Bank of America, seem to show that things aren't as bad as some expected, said Zechner.
"And then you're so oversold that you get these relief rallies," he said.
As well, bad news seems to be having a less dramatic effect these days, he said, giving Thursday’s inflation data in the U.S. as an example.
"I think it's safer to go into the water at this point," he said. "You've taken a lot of the risk out of the market."
This may signal that the market is nearing its bottom, he said.
“I think the volatility continues. But I think there's probably a point that there'll be an upward bias, particularly into the fourth quarter,” he said. “The fourth quarter does always tend to be the strongest quarter of the year.”
Even the promise of a recession is at least no longer a surprise, but a relative certainty, said Zechner.
“In order to get inflation down, they've got to slow the economy down. It’s inevitable that’s going to start to happen at some point.”
On Wednesday, Statistics Canada will release its own inflation data, giving investors insight into whether rate hikes are hitting prices yet ahead of the Bank of Canada's rate decision next week.
The Canadian dollar traded for 72.70 cents US, compared with 72.83 cents US on Monday.
This earnings season will give investors a better idea of what’s coming, he said, as the big U.S. tech companies offer a look into how the economic slowdown is hitting their bottom lines next week.
“I think next week is a pretty big test for the market in terms of the earnings reports, more so than what we've seen so far,” he said.
The December crude contract was down US$2.46 at US$82.07 per barrel and the November natural gas contract was down 25.4 cents at US$5.75 per mmBTU.
The December gold contract was down US$8.20 at US$1,655.80 an ounce and the December copper contract was down 5.4 cents at US$3.36 a pound.
This report by The Canadian Press was first published Oct. 18, 2022.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
The Canadian Press
