North American stock markets started the fourth quarter higher with investors again turning to the tech sector amid some disappointing economic signals in the U.S.
“I think we’re moving back to the trades that have been working for the vast majority of 2020,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
“Technology is working extremely well again, consumer and communication names in the U.S. are just on fire, and its largely the same in Canada.”
While initial and continuing U.S. jobless claims were a little better than expected last week, ISM manufacturing activity significantly slowed in September.
That put pressure on some of the cyclical sectors of the market compared with technology, which shines even if there isn’t an improving economy.
In addition, time is almost running out for another fiscal stimulus package in the U.S., given that politicians are heading home Friday afternoon to focus on the upcoming election.
The Democrats delayed Thursday’s House vote on their proposal in hopes of reaching agreement with the Republicans, despite being at least US$500 billion apart.
“What sectors are being preferred the marketplace today is somewhat indicative that the markets are not expecting that we’re going to get a deal,” Archibald said in an interview.
“If there’s no stimulus package, then you’re not likely to see the cyclical sectors do very well going forward, and you’ll probably see money rotating back into some of the secular growth parts of the market like technology.”
The S&P/TSX composite index closed up 63.16 points at 16,184.54 after hitting an intraday high of 16,228.45.
In New York, the Dow Jones industrial average was up 35.20 points at 27,816.90. The S&P 500 index was up 17.80 points at 3,380.80, while the Nasdaq composite was up 159.00 points at 11,326.51.
Energy was the lone sector to fall on the TSX. It lost 3.6 per cent amid a pullback in crude oil prices on higher than expected exports from OPEC countries plus Russia.
The November crude contract was down US$1.50 at US$38.72 per barrel and the November natural gas contract was unchanged at nearly US$2.53 per mmBTU.
Several Canadian oil produces saw their shares decrease, led by Cenovus Energy Inc. which fell 6.5 per cent, Crescent Point Energy Corp. down five per cent and Suncor Energy Inc. off 4.7 per cent.
Technology led the market, gaining 2.3 per cent with Constellation Software Inc. up 3.5 per cent and Shopify Inc. 2.9 per cent higher.
Real estate and consumer discretionary were also stronger.
Materials increased 0.69 per cent on higher gold prices.
The December gold contract was up US$20.80 at US$1,916.30 an ounce and the December copper contract was down 15 cents at US$2.89 a pound.
The Canadian dollar got a boost from as manufacturing activity expanded in September at its fastest pace in more than two years.
The loonie traded for 75.23 cents US compared with 74.97 cents US on Wednesday.
This report by The Canadian Press was first published Oct. 1, 2020.
Companies in this story: (TSX:CSU, TSX:SHOP, TSX:CVE, TSX:CPG, TSX:SU, TSX:GSPTSE, TSX:CADUSD