TORONTO — North American stock markets edged higher Tuesday as hopes of a new U.S. stimulus deal offset concerns about mounting COVID-19 infections and new lockdowns.
"I guess there's a little bit more renewed hope on getting some stimulus passed," said Natalie Taylor, a portfolio manager with CIBC.
"The headlines this morning were more negative and now there seems like there's hope again."
A bipartisan group of U.S. senators is expected to unveil legislation as early as Monday for their proposal worth about US$908 billion.
Taylor said the market momentum continues, although the rotation toward cyclical sectors has taken a breather with technology and gold catching up a bit.
The S&P/TSX composite index closed up 56.65 points to 17,639.00. It hit an intraday high of 17,654.92 that's just 1.8 per cent off February's record high.
In New York, U.S. stock markets set new record intraday highs with the Dow Jones industrial average closing up 104.09 points at 30,173.88. The S&P 500 index was up 10.29 points at 3,702.25, while the Nasdaq composite was up 62.82 points at 12,582.77.
Eight of the 11 major sectors on the TSX were higher with energy up one per cent, followed by health care, utilities and industrials.
Energy gained despite lower crude oil prices with shares of several Canadian producers rising, including Crescent Point Energy Corp. up 6.9 per cent.
The January crude contract was down 16 cents at US$45.60 per barrel and the January natural gas contract was down 0.7 of a cent at US$2.40 per mmBTU.
The Canadian dollar traded for 78.08 cents US compared with 78.12 on Monday.
Shares of BlackBerry Ltd. climbed 3.4 per cent in heavy trading to help the technology sector.
Materials slipped slightly even though gold prices were up again, as additional stimulus is expected to increase inflation. Gold is priced in U.S. dollars and acts as a hedge against inflation, which erodes the value of the dollar.
The February gold contract was up US$8.90 at US$1,874.90 an ounce and the March copper contract was down 1.75 cents at US$3.50 a pound.
Lockdowns have accelerated, particularly in California, as the number of infections has spread. Ontario and Quebec are also reporting elevated case loads.
Taylor said that is starting to weigh on markets as lockdowns are beginning to impact economic numbers with restaurant reservations down and mobility flattish.
"It's just kind of blunting the euphoria that we've seen over the last few days or I guess it's been the whole month of November since vaccine news started to get priced in," she said in an interview.
The U.K. started Pfizer vaccinations Tuesday, while the U.S. Food and Drug Administration is expected to give its approval as early as Thursday with vaccines beginning to be administered a few days later.
Moderna and AstraZeneca are expected to follow, with others in the pipeline.
Johnson & Johnson said its late-stage trial results of a single-dose COVID-19 vaccine could come in January, earlier than expected.
Taylor said that vaccine optimism is already priced into markets, although there's been some discussion related to the unique distribution requirements for the Pfizer vaccine given the very low temperature required to keep it viable.
"I think it's little puts and takes and it's just kind of slowed that rotation and we're sort of in a wait-and-see mode as to whether its going to break one way or the other."
This report by The Canadian Press was first published Dec. 8, 2020.
Companies in this story: (TSX:CPG, TSX:BB, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
