TORONTO — Strong earnings results in the U.S. pushed North American stock markets higher as investors welcomed signs that economic growth may not be as bad as originally thought.
The S&P/TSX composite index increased for a third-straight session to close up 342.09 points or 1.8 per cent to 18,937.71.
In New York, the Dow Jones industrial average was up 754.44 points at 31,827.05. The S&P 500 index was up 105.84 points at 3,936.69, while the Nasdaq composite was up 353.10 points or 3.1 per cent at 11,713.15.
Eight companies reporting Tuesday or after markets closed Monday beat analyst forecasts in terms of earnings and most of them in terms of sales.
"So markets are probably realizing today that the emerging worries about growth that we've been hearing about for the past few months have perhaps been a little bit exaggerated," said Jules Boudreau, an economist at Mackenzie Investments.
Markets also got a boost from U.S. building permits coming in above expectations despite a 0.6 per cent decline for June. U.S. housing starts were below expectations in falling two per cent in June, but the May number was revised up.
"So broadly, story is the construction market is certainly slowing due to rising rates, but not more than previously expected. That's consistent with the story we're seeing in Canada as well, where housing is really resilient," he said in an interview.
It was a full risk-on day with 10 of the 11 sectors on the TSX higher with five increasing by more than two per cent and eight by more than one per cent.
Technology led by climbing 2.5 per cent as shares of Shopify Inc. increased 4.7 per cent after the Ottawa-based e-commerce firm announced a partnership with YouTube to allow merchants to sell through the video platform.
Energy was the second-best performer, gaining 2.4 per cent as crude oil prices again surpassed US$100 per barrel with Imperal Oil up 4.8 per cent and PrairieSky Royalty Ltd. 4.7 per cent.
The September crude contract was up US$1.32 at US$100.74 per barrel and the August natural gas contract was down 21.5 cents at US$7.26 per mmBTU.
The Canadian dollar traded for 77.50 cents US compared with 77.23 cents US on Monday.
The heavyweight financials sector rose 2.3 per cent as all Canadian banks were higher with National Bank leading the way by increasing 3.2 per cent.
In addition to bouncing back from some recent weakness, the banking sector is very dependent on the economy and responded to the positive growth story. Real estate data was also reassuring in both markets even though it is U.S. data.
"If we see a more resilient housing market in the U.S., it probably means the same for Canada, which is good for banks' bottom line," Boudreau said.
The positive mood also helped to lift consumer discretionary as Magna International Inc. rose 6.0 per cent, while industrials was boosted by Bombardier Inc. climbing 8.9 per cent and Air Canada was 4.3 per cent higher.
Strong gains by forestry companies helped push materials higher even though gold prices were relatively flat and copper fell.
West Fraser Timber Co. Ltd. led the way, surging 14.7 per cent following a report that Kronospan, an existing shareholder, and CVC Capital Partners were interested in making a bid for the company. West Fraser said it hasn't received a takeover offer.
Interfor Corp. and Canfor Corp. were up 9.0 and 8.7 per cent respectively.
The August gold contract was up 50 cents at US$1,710.70 an ounce and the September copper contract was down 5.5 cents at US$3.29 a pound.
This report by The Canadian Press was first published July 19, 2022.
Companies in this story: (TSX:IFP, TSX:CFP, TSX:WFG, TSX:MG, TSX:PSK, TSX:IMO, TSX:NA, TSX:BBD.B, TSX:AC, TSX:SHOP, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press