Key Takeaways
The S&P 500 surged to a new record high of 7,259.22 on Tuesday, as falling oil prices and a robust corporate earnings season bolstered investor confidence.
"The rally is also based on the extreme success of the earnings season so far... this is a really special quarter, really a monster quarter," Pierre-Benoît Gauthier, vice-president of investment strategy at IG Wealth Management, said.
The rally saw the S&P 500 add 58.47 points, or 0.8 percent, while the Dow Jones Industrial Average rose 356.35 points (0.7 percent) to 49,298.25. The tech-heavy Nasdaq composite gained 258.32 points (1 percent) to close at 25,326.13, also a record. The Russell 2000 index of smaller companies outperformed, rising 1.8 percent.
The market's resilience, despite ongoing geopolitical tensions, highlights a focus on strong corporate fundamentals. With over 80 percent of companies beating high earnings expectations, according to Gauthier, investors are betting that profitability can outweigh risks from inflation and conflict.
A significant catalyst for the day's rally was a sharp pullback in energy prices. The June crude oil contract fell $4.15 to $102.27 per barrel, while Brent crude, the international standard, dropped four percent to $109.87. The decline came as U.S. military leaders indicated a ceasefire with Iran remains in effect and that efforts are underway to open the Strait of Hormuz, which would allow oil tankers to resume shipments from the Persian Gulf.
In contrast to the U.S. rally, Canada's S&P/TSX composite index fell 71.96 points to 33,566.91. The decline was largely driven by a 15.63 percent plunge in shares of Shopify Inc. after the company reported a net loss of US$581 million for its latest quarter. The Canadian dollar traded for 73.44 cents US, down slightly from the previous day.
This article is for informational purposes only and does not constitute investment advice.
