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Market Watch: November 5

Nov 5, 2021 | 2:25 PM

Big Picture

U.S. Markets Keep Climbing

U.S. stocks continued their march higher to new closing records, as investor sentiment continues to trend positive in the wake of a strong earnings season and diminishing pandemic fears. All three U.S. markets once again posted solid gains, while the TSX added 210 points, nearing a record of its own, thanks in large part to the energy sector, which climbed nearly 2 per cent.

The S&P 500 and Nasdaq hit new heights for a fourth straight session on Tuesday, while the Dow recorded its third straight record close, finishing above 36,000 for the first time. In Canada, the TSX shed 77 points, due to a pullback in commodities, which helped drag the loonie to its lowest level in nearly a week.

All eyes were on the Federal Reserve on Wednesday as the central bank approved plans to begin tapering its bond-buying program this month and end it by June, according to initial estimates. Fed officials say they’ll reduce the bank’s bond purchases by $15 billion a month in November and by an additional $15 billion in December. The Fed’s announcement bolstered sentiment on both Bay and Wall Streets, with fresh record closes for all three major U.S. indexes and a near-record close for the TSX, which rose 95 points.

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U.S. stocks were mixed on Thursday as investors continue to parse the Fed’s latest comments. The S&P 500, Nasdaq and TSX registered modest gains, while the Dow lost 33 points.

Another Positive Week for North American Markets For the four trading days covered in this report, the Dow rose 305 points to close at 36,124, the S&P 500 added 75 points to settle at 4,680, while the tech-heavy Nasdaq jumped 442 points to close at 15,940. In Canada, the TSX climbed 305 points to end at 21,342.

Strategy

Canadian job growth downshifts in October but continues at a healthy clip

Canada’s job market continued to grow, albeit at a slower pace than expected in October, as retail businesses ramp up holiday season hiring. The economy added 31,200 jobs last month, slightly below consensus expectations for a gain of 41,600 and down from September’s knock-out 157,100 reading.

The unemployment rate fell to 6.7 per cent as participation slipped slightly to 65.3 per cent, and hours worked rose 1 per cent. October’s gain was made up entirely of full-time employment (+36,400) while part-time employment fell modestly (-5,200).

Sector breadth was poor with the bulk of gains registered in the retail sector, which returned to pre-pandemic employment levels with a net gain of 72,000 jobs. Employment in goods producing industries was down by 6,200. Average hourly wages for permanent workers were up 2.1 per cent from a year earlier, which should give some comfort to policymakers at the Bank of Canada, who argue broader price pressures are not likely to trigger a labour cost spiral.

Overall, Canada’s labor market had been on tear since emerging from a third wave of COVID earlier this year, generating 600,000 new net jobs since May that has brought about 30,000 higher than it was in February 2020.

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