Canada’s main stock index inched higher on Wednesday, supported by higher gold prices, while investor attention centered on Nvidia’s (NVDA-Q) quarterly earnings due after the U.S. markets close .
At 10:50 a.m. ET, Toronto’s S&P/TSX composite index was up was up 159.86 points, or 0.53 per cent at 30,196.22, snapping two straight days of losses amid increased doubts about stretched valuations in technology and artificial intelligence stocks and ambitious spending in the sector.
Markets now focus on Nvidia’s third-quarter results, which could either make or break the tone for the AI-driven market rally that has been responsible for most gains on Wall Street this year.
“I think everybody’s waiting for Nvidia to report earnings after the bell. Everybody’s talking about the biggest company in the world by far and it’s going to obviously mean a lot to the tech area,” said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.
Investors are watching for a delayed U.S. labour report, now scheduled for Thursday, which could confirm weakness in the job market and reignite hopes of a Federal Reserve rate cut.
“The data we will receive on Thursday will give us a little bit more information as to the strength of the economy and for us here in Canada, even though it is the U.S. number,” said Small.
The gold subindex outperformed peers with a 2.9 per cent rise as gold prices rose 1 per cent, boosted by demand for safe-haven assets.
Meanwhile, Bank of Canada Deputy Governor Nicolas Vincent is set to speak later in the day, potentially offering clues on the country’s policy path.
Wall Street’s main indexes inched higher on Wednesday following a sharp sell-off earlier in the week, as investors set their eyes on Nvidia’s earnings that could prove to be a make-or-break moment for the AI trade.
Nvidia’s earnings, due after markets close on Wednesday, are seen as a litmus test for the AI-driven rally that has pushed markets to record highs this year.
The rising market has recently come under scrutiny on doubts around monetization of the technology, circular spending within the industry and high debt levels at tech companies to fund AI investments.
Options data from analytics firm Option Research & Technology Services (ORATS) showed an implied move of about 7 per cent for Nvidia’s stock in either direction after its results.
Shares of the AI giant gained 2.3 per cent after falling about 4.6 per cent in the last two sessions.
Most megacap and growth stocks were mixed, though Alphabet outperformed with a 5 per cent jump.
“We may have a little more back and forth that investors have been primed for this whole year to buy the dip and we certainly have had pretty big dips,” said Melissa Brown, SimCorp’s managing director of investment decision research.
“At least for now, some of these high flying names may still get support as investors view the current prices as more attractive”
Worries over high valuations and dwindling expectations of a December interest rate cut have weighed on the markets of late, with the S&P 500 recording its fourth consecutive day of losses on Tuesday.
As of the S&P 500’s last close, the U.S. benchmark has dropped nearly 4.4 per cent from its October peak and stands 12.5 per cent higher on a year-to-date basis.
Seven of the 11 S&P sub-sectors were trading higher, though energy lagged with a 2.1 per cent drop as oil prices dropped following a report of a U.S. proposal to end the Russian war in Ukraine.
Tthe Dow Jones Industrial Average rose 6.58 points, or 0.01 per cent, the S&P 500 gained 28.31 points, or 0.43 per cent, and the Nasdaq Composite gained 160.30 points, or 0.72 per cent.
Lowe’s advanced 3.2 per cent after the home improvement retailer posted third-quarter profit above expectations. TJX rose 0.3 per cent as the TJ Maxx parent raised annual forecast with deal-focused shoppers driving demand.
Big-box retailer Target dropped marginally after reporting a bigger-than-expected drop in quarterly sales with cash-strapped U.S. consumers pulling back on discretionary spending. Rival Walmart is scheduled to report later this week.
The S&P 500 and the Nasdaq both closed below their 50-day moving averages earlier this week – an important technical threshold – for the first time since late April.
Later in the day, minutes from the Fed’s October policy meeting – where the central bank cut rates by 25 basis points – are on investors’ radar. On Thursday, the September U.S. jobs report would be in focus.
Among other moves, Unity Software shares added 6.8 per cent after announcing a partnership with Epic Games to bring its games to gaming platform Fortnite.
Declining issues outnumbered advancers by a 1.23-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.
The S&P 500 posted eight new 52-week highs and 13 new lows, while the Nasdaq Composite recorded 21 new highs and 86 new lows.
Reuters
