North American stock markets rise again to start month amid COVID hopes

TORONTO — North American stock markets posted a second day of gains to start September as optimism about COVID-19 trumped disappointing U.S. private payroll numbers.

Signs of potential vaccine and treatment approvals and lower infection rates in former hotspots are boosting investor confidence, says Allan Small, senior investment adviser at HollisWealth.

In addition, the Federal Reserve is prepared to keep interest rates low and polls suggest U.S. President Donald Trump may be narrowing the gap with rival former vice-president Joe Biden.

“There’s a lot of positives out there and I think the market’s just running with it, especially the technology sector,” he said in an interview.

September is starting off well despite its history of being a challenging month.

“For those waiting for September to be the usual bad month, I would caution you because this September is like no other that we’ve seen ever, just like August historically is a difficult month and look what we saw in August.”

Small said government and central bank stimulus is helping stock markets because investors have nowhere else to go with interest rates so low.

“There is no alternative if you want to make money right now, you’ve got to be in this market and that’s why I’m consistently seeing money moving into this market.”

The midweek gains saw the Nasdaq composite surpass 12,000 points and the S&P 500 set another record high.

That’s despite weaker private payroll numbers.

The ADP National Employment Report showed private payrolls rose by 428,000 jobs in August, well short of the 1.17-million gain some economists had been expecting.

Small said the miss was somewhat anticipated because of plant closures over the summer due to the coronavirus lockdowns.

“I think things could start to pick back up as we move towards the end of the year because … I think we’re going to see some positive data and some good news from (drug companies) to combat the coronavirus.”

The S&P/TSX composite index closed up 52.98 points at 16,697.97 to put it 6.9 per cent off its high set in February.

In New York, the Dow Jones industrial average was up 454.84 points at 29,100.50. The intraday level of 29,162.88 was less than 1.4 per cent from its peak. The S&P 500 index was up 54.19 points at 3,580.84, while the Nasdaq composite was up 116.78 points at 12,056.44.

The Canadian dollar traded for 76.53 cents US compared with 76.60 cents US on Tuesday.

Nine of the 11 major sectors on the TSX were higher, led by consumer discretionary, telecommunications and utilities. Shares of Alimentation Couche-Tard Inc. surged 7.5 per cent after it reported very strong quarterly profits.

A U.S. takeover offer of Cogeco Inc. and Cogeco Communications Inc. pushed the communications subsidiary’s shares up 15 per cent while shares of Rogers Communications Inc. were up 4.7 per cent on its side deal to purchase Cogeco’s Canadian assets.

The materials sector was up despite a drop in gold prices.

The December gold contract was down US$34.20 at US$1,944.70 an ounce and the December copper contract was down 0.8 of a cent at US$3.02 a pound.

The energy and technology sectors were down on the day with Shopify Inc. losing 5.7 per cent to partially reverse Tuesday’s increase.

The October crude contract was down US$1.25 at US$41.51 per barrel and the October natural gas contract was down 4.1 cents at nearly US$2.49 per mmBTU.

This report by The Canadian Press was first published Sept. 2, 2020.