Tech Stocks and Gold Prices Lift Markets in Canada and the US
Major technology companies fueled market gains in both Canada and the US on Monday, while a surge in gold prices provided further support to the Canadian stock index. The S&P/TSX composite index and key US indices like the Dow Jones and Nasdaq all saw increases.
Market Performance Overview
The S&P/TSX composite index closed up 190.62 points at 29,958.98. In New York, the Dow Jones industrial average rose 66.27 points to 46,381.54, the S&P 500 index increased by 29.39 points to 6,693.75, and the Nasdaq composite gained 157.50 points to reach 22,788.98.
Tech Sector Drives Gains: Nvidia, Oracle, and Apple
Shares of Nvidia surged by 3.9% following an announcement of a US$100 billion investment in OpenAI, the creator of ChatGPT. This partnership aims to bolster OpenAI’s computing capabilities with at least 10 gigawatts of Nvidia AI data centers. Oracle Corp. also contributed to the market's upward movement with a 6.3% increase, spurred by news that the company will receive a copy of TikTok’s algorithm to manage its operations for US users. Apple Inc. saw its shares rise by 4.3%, driven by strong early demand for the newly launched iPhone 17 and growth potential in the Chinese market.
Impact on Ancillary Sectors and Canadian Markets
The surge in tech stocks had a ripple effect on related sectors. U.S. utilities, for example, experienced gains as new data centers are expected to require substantial electricity for operations and cooling. In Canada, the tech momentum translated into a 2.7% increase for shares of Shopify Inc. The strength of the tech sector helped to boost the overall market.
Gold's Record Highs Propel Materials Sector
Another significant factor was the record highs reached by gold on Monday. The December gold contract increased by US$69.30 to US$3,775.10 an ounce, leading to a 2.4% gain in the TSX materials sector. Barrick Mining Corp. saw a 7.4% increase following the announcement of a study indicating a Nevada project's potential to produce up to 750,000 ounces of gold annually. Similarly, Kinross Gold Corp. shares rose by 3.8%.
“While gold has done really well over the past year and a bit, the gold miners hadn’t done as well until more recently,” said Ian Chong, portfolio manager at First Avenue Investment Counsel. “So it’s playing a lot catch-up and a lot these names are really firing in all cylinders.”
Investment Strategy and Canadian Stocks
Amidst Wall Street's recent record highs, Chong advises investors to prioritize quality stocks that promise long-term growth. Bombardier shares reached their highest level since September 2008, with a 7.8% increase, driven by an aircraft delivery to the U.S. Air Force. The November crude oil contract experienced a slight decrease of 12 cents US, settling at US$62.28 per barrel.
“We’re not looking to chase further gains, that’s for sure,” he said. “We are being prudent with capital. We’re looking for opportunity with good companies that have very good earnings in terms of recurring revenues, sustainability, visibility, strong balance sheets ... Everything you would look for in a regular market anyway.”
Investors are encouraged to maintain a focus on companies with strong fundamentals and sustainable earnings as they navigate the current market environment.
