By Mike Keerma
U.S. stock markets closed at record highs on Friday, rallying powerfully
from a mid-week dip, as the yield on 10-year U.S. Treasury notes fell about
6 basis points to 2.154%. Stocks climbed in tandem with bonds, overcoming
any trepidation about May’s weaker-than-expected U.S. jobs report. The
S&P 500 Composite Index gained 1% on the week, while the
Nasdaq Composite Index rose 1.5%. In Canada, weakness in the energy sector dampened performance as
S&P/TSX Composite tracked a modest 0.2% higher on the week, held in check by a -4.0% slide in
the price of
A weaker than expected jobs report for May indicated that U.S. non-farm
payrolls grew by 138,000 in the month, while the unemployment rate edged down to
4.3%. Observers agree that neither datapoint is enough to change the
Federal Reserve’s expected rate hike later this month, but may dampen plans
for another hike later in the year.
In Canada, robust first-quarter GDP growth of 3.7% over the last quarter of
2016 (2.3% annualized) indicates a solid recovery from the oil shock, as
crude prices hover on either side of US$50 per barrel, and a dissipation of
the the economic slack that has so troubled the Bank of Canada for the past
couple of years.
In company news, shares of online retailer
Amazon.com Inc. (NASDAQ: AMZN) touched US$1,000 last week for the first time, propelled by eight
consecutive profitable quarters driven by its cloud-computing division,
Amazon Web Services, and to a lesser degree by its online retail business.
The continuing strength of tech companies like Amazon and
Apple Inc. (NASDAQ: AAPL), which recently became the largest U.S. publicly-traded company by market
capitalization, have helped fuel the Nasdaq Composite Index to record highs
and a 17% year-to-date advance.
In Canada, the big banks again turned in another quarter of stellar per
share earnings, most recently last week with the
Bank of Nova Scotia (TSX: BNS) reporting a 15% annualized increase in adjusted earnings per share.
Adjusted earnings per share at
Royal Bank of Canada (TSX: RY) rose 11%,
Bank of Montreal (TSX: BMO) reported a 11% increase,
Toronto-Dominion Bank (TSX: TD) earnings were up 11%, and
Canadian Imperial Bank of Commerce (TSX: CM) per share earnings rose 10%.
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