TORONTO — Major North American stock markets climbed Thursday, boosted by weak U.S. retail sales data that traders took as a sign the Federal Reserve may delay raising interest rates.
In Toronto, the S&P/TSX composite index racked up a three-digit gain, adding on 137.21 points or nearly one per cent, to 14,503.67.
It was a broad-based rally, with all sectors up, with financials and consumer staples stocks as the leading advancers.
In the currency market, the Canadian dollar was up 0.22 of a U.S. cent at 75.99 cents US on higher oil prices. The October crude oil contract was ahead 33 cents to US$43.91 per barrel.
On Wall Street, all major indices were ahead by one per cent. The Dow Jones industrial average gained 177.71 points at 18,212.48, while the broader S&P 500 index added 21.49 points at 2,147.26. The Nasdaq composite climbed 75.92 points at 5,249.69.
Much of the optimism came from the latest retail sales figures from the U.S. Commerce Department, which reported that shoppers had cut back on spending in August.
Retail sales fell 0.3 per cent last month, a contrast to the first eight months of the year in which sales rose 2.9 per cent compared with the same period in 2015.
The solid retail spending in prior months had defied anemic economic growth in the first half of 2016. Retail sales seemed to largely track a robust pace of hiring, which similarly went against the slowing pace of overall economic growth.
Although August’s report was weak, traders took it positively because it will be a data point that the central bank will have to take into account when it decides what to do about interest rates at its two-day monetary policy meeting that starts next Tuesday.
“It looks like it was a sobering perspective with the consumer spending now really starting to moderate and people wanting to sit on their wallets,” said Cynthia Caskey, a portfolio manager at TD Wealth.
“That obviously is going to play into the momentum of the U.S. going into the Fed rate decision. That is going to be a key item.”
Caskey said it will be a report that the Fed will likely not ignore, considering that consumer spending accounts for anywhere between two-thirds to 70 per cent of the economy in the U.S.
In other economic news, the Bank of Canada said that household debt levels hit a new record in the second quarter, partly due to rising real estate markets.
Meanwhile in commodities, the December gold contract fell US$8.10 to US$1,318 per ounce, the October contract for natural gas added four cents to US$2.93 per mmBtu and December copper was unchanged at US$2.16 a pound.
— With files from The Associated Press
