Daily market snapshot

Friday, 12/5/2025 p.m.

• TSX pulls back as yields rise – Canadian stocks dropped from record highs as government bond yields and the loonie jumped after the sizable beat in job gains for November*. In the U.S. major equity indexes were little changed today but eked out a modest weekly gain to kick off December*. Investors digested the delayed September data on consumer spending and the Fed’s preferred inflation gauge which came in largely as expected. Optimism around a potential Fed rate cut next week continues to support sentiment, alongside a rebound in technology and AI stocks. On the corporate front, Netflix announced a $72 billion cash-and-stock deal to acquire Warner Brothers, though the transaction is expected to face significant regulatory scrutiny. Shares of Netflix dropped 3%, while Warner Brothers shares finished up more than 5% on the news*.
   
• Canada employment surprises to the upside, reinforcing BoC pause - The Canadian economy added 53,600 jobs in November, a sharp upside surprise compared to expectations for a loss of 2,500 jobs. Most of the increase came from part-time positions, while the healthcare sector accounted for the bulk of gains, adding 46,000 jobs*. The unemployment rate fell to 6.5% from 6.9%, marking its lowest level in over a year*. Combined with stronger-than-expected Q3 GDP growth of 2.6%, today’s data reinforces expectations that the Bank of Canada will hold rates steady at 2.25% next week, the lower end of its neutral range. Bond markets are taking this further, now nearly pricing in one rate hike by the end of 2026. We expect the BoC to remain on hold, particularly given uncertainty surrounding USMCA negotiations and broader economic risks in the months ahead.
   
• All eyes on the Fed next week - Next Wednesday brings the Fed’s policy decision, one that has sparked intense debate, reflected in wide swings in rate expectations and mixed messages from Fed officials. Following recent comments from Fed Governor Williams, bond markets now price in a 95% probability of a rate cut, up from just 30% a couple of weeks ago*. With October and November jobs reports delayed until December 16 due to the government shutdown, the Fed faces a more uncertain backdrop and will likely lean on private data to gauge labor market health. The modest decline in ADP private payrolls for November may push the Fed to cut rates to 3.50%–3.75% next week, in our view. However, we expect the Fed’s projections for 2026 to signal caution on further easing. Our base case calls for one or two additional cuts in 2026 before the Fed concludes its easing cycle.
   

Angelo Kourkafas, CFA;
Investment Strategy

^{Source: *Bloomberg}

Thursday, 12/4/2025 p.m.

• Markets close higher on new labour-market data – The TSX and U.S. equity markets finished higher on Thursday, with industrial and technology stocks leading gains*. Bond yields rose, with the 10-year Government of Canada yield at 3.22% and the 10-year U.S. Treasury yield at 4.10%* In international markets, Europe advanced as eurozone retail sales for October rose 1.5% year-over-year, beating forecasts of 1.0% growth*. The U.S. dollar strengthened against major currencies. In commodity markets, WTI oil traded higher, after U.S.-Russia talks did not result in a breakthrough toward to a peace deal*.
   
• Jobless claims, layoffs lower than expected – U.S. initial jobless claims dipped to 191,000 in a holiday-shortened week, below estimates of 221,000*. Continuing claims, which measure the total number of people receiving benefits, were little changed at 1.94 million, also lower than forecasts to tick up to 1.95 million*. Challenger, Gray & Christmas reported layoffs dropped to 71,000 in November, down from 153,000 in October*. We believe this data suggests the labour market is cooling but not collapsing. The unemployment rate remains modest at 4.4%, while job openings at 7.2 million have dipped below unemployment of 7.6 million*. In our view, wage gains should continue to outpace inflation, providing positive real wages to support consumer spending and the broader economy.
   
• Fed's preferred inflation gauge expected to be mixed – U.S. personal consumption expenditure (PCE) inflation for September will be released tomorrow, delayed by the government shutdown. The headline figure is expected to edge up to 2.8%, from 2.7% the prior month*. Core PCE, which excludes more-volatile food and energy prices, is forecast to tick down to 2.8%, from 2.9% in August*. While PCE inflation remains above the Fed's 2% target, we believe the central bank is on track to ease again next week to help support the softening labour market. Bond markets are pricing in an 87% chance of a rate cut this month, likely followed by another two cuts next year*. We expect inflation to moderate next year, as a slowdown in home prices** and rents*** likely feeds through to the shelter component, in our view, likely enabling the Fed to continue its easing cycle, though at a slower pace.
   

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet ** S&P national home price index *** Zillow Observed Rent Index}

Wednesday, 12/3/2025 p.m.

• Stocks gain on firming U.S. services activity – North American equity markets closed higher on Wednesday following a better-than-expected U.S. ISM Services PMI reading for November.* The Services PMI rose to 52.6, its highest since February, signaling steady activity in the services sector of the economy.* The prices sub-index fell to 65.4 in November—the lowest since April—an encouraging sign for U.S. services inflation after the index jumped to a three-year high in October.* On the labour-market front, the ADP employment report for November showed that U.S. private employment declined by 32,000, well below expectations for a gain of 40,000.* From a leadership perspective, most sectors of the S&P 500 finished the day flat to higher, with cyclical sectors such as energy and financials leading the way.* Additionally, U.S. small-cap stocks saw strong returns, with the Russell 2000 Index gaining well over 1%.* On the corporate front, Royal Bank of Canada and National Bank of Canada both posted better-than-expected revenue and earnings this morning, following up strong results from Bank of Nova Scotia yesterday.* Overseas, markets in Asia were mixed overnight, with Japan’s Nikkei gaining more than 1% while stocks in China were mostly lower.* European markets were little changed after a better-than-expected eurozone composite PMI reading, which rose to 52.8—the highest since May 2023—signaling improving economic activity in the region.* Bond yields closed slightly lower, with the 10-year U.S. Treasury yield hovering around 4.06% and the 10-year GoC yield finishing the day near 3.18%.*
   
• U.S. employment decline likely paves the way for a Fed cut next week – The ADP employment report showed that U.S. private payrolls fell by 32,000 in November, well below expectations for a gain of 40,000.* Weakness was most pronounced among small businesses, with companies employing fewer than 50 workers shedding 120,000 jobs during the month.* With employment data from the Bureau of Labor Statistics (BLS) delayed until later this month due to the government shutdown, today’s report will be one of the final labor-market indicators before next week’s Fed meeting. While the initial ADP estimate has historically been an imperfect guide to the monthly BLS payroll data***, the softness in November will likely provide further reason for a Fed rate cut, with futures markets now pricing in roughly a 90% chance of a cut at next week’s meeting.** Job openings remain well below recent highs*, signaling falling demand for labour and suggesting job gains could be modest over the coming year. However, we expect economic activity to remain healthy, which should help keep layoffs in check and help create a stable labor market despite slowing job growth.
   
• Strong earnings growth expected to persist in 2026 – Corporate profits have delivered in 2025, with S&P 500 earnings on pace to grow by 11.1% for the year, following a strong 10.4% gain in 2024.* Familiar faces have driven earnings growth in 2025, with the information technology sector expected to grow earnings by 22% for the year, while communication services is on pace for nearly 17% growth.* Backed by robust profit growth, it’s no surprise these two sectors have been the top performers in 2025 and have led U.S. markets higher for much of the past three years.* Canadian stocks have also seen healthy profit growth in 2025, with TSX earnings on pace to rise by 12% for the year, led by strength in the materials and technology sectors.* In 2026, earnings growth is expected to be broad-based, with all 11 sectors of the TSX and S&P 500 projected to see positive growth.* Within the U.S., while information technology and communication services are each expected to post double-digit earnings growth in 2026, cyclical sectors of the S&P 500—such as industrials, consumer discretionary, and materials—are also expected to see profits grow by more than 11%.* While we acknowledge reasons for optimism within U.S. technology, we believe diversification will be critical for investors going forward. As part of our U.S. opportunistic equity sector guidance, we recommend overweight positions in industrials, health care, and consumer discretionary, offset by underweights in utilities and consumer staples. We recommend maintaining a neutral allocation to all other sectors. Within our Canadian equity sector guidance, we recommend overweight positions in energy, industrials and materials, offset by underweights in technology, communication services, consumer discretionary, and consumer staples.
   

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **CME FedWatch Tool ***FactSet, Edward Jones.} 

Tuesday, 12/2/2025 p.m.

• Stocks finish mixed – U.S. equity markets closed higher on Tuesday, led by strength in the technology and industrials sectors.* The S&P 500 technology sector gained nearly 1% following upbeat earnings reports from mid-cap tech companies MongoDB and Credo Technologies, which helped support sentiment for the sector.* The industrials sector was higher by roughly 1% as well, supported by shares of Boeing, which gained roughly 10% on the day following commentary from company management that it expects stronger aircraft deliveries to boost free cash flow in 2026.* On the domestic front, Bank of Nova Scotia reported earnings and sales ahead of expectations, helping support the financials sector of the TSX. However, weakness in the materials and energy sectors led the TSX lower for the day.* Overseas, markets in Asia were little changed overnight, while European markets were mixed following eurozone inflation data that showed headline CPI rose by 2.2% on an annual basis in November, slightly above expectations.* Bond yields were little changed Tuesday, with the 10-year GoC yield closing around the 3.2% mark, while the 10-year U.S. Treasury yield finished the day at 4.09%.*
   
• Markets eye busy week ahead – It’s a quiet day in terms of economic data on Tuesday; however, investors will have plenty of fresh data to digest over the remainder of the week, with reports on economic activity, labour markets, and inflation taking centre stage. Tomorrow will bring a read on U.S. payroll growth, with the ADP employment report for November, where expectations call for a gain of 40,000 in private payrolls for the month.* In addition, we’ll get a read on business activity in the services sector of the U.S. economy with the ISM Services PMI for November. Tomorrow’s report will follow a weaker-than-expected Manufacturing PMI yesterday that showed declines in the employment and new orders sub-indexes, perhaps signaling fatigue within the manufacturing sector of the economy.* Friday will bring PCE inflation data for September, which has been delayed due to the U.S. government shutdown, with expectations for both headline and core PCE to rise by 2.8% on an annual basis.* We'll also get a read on trends in the domestic labour market, with the November labour-force survey expected to show employment growth of 5,000 for November, while the unemployment rate is expected to hold steady at 6.9%.* Friday's labour-market report will be the last key economic datapoint ahead of the Bank of Canada's final meeting of the year on December 10. With employment gains of over 60,000 in each of the past two months and the unemployment rate falling to 6.9% in October, markets are expecting the BoC to hold rates steady at next week's meeting.*
   
• 2026 expected to bring strong global earnings growth – 2025 has been a strong year for global equities, with Canadian and overseas markets on pace to gain over 20%.* Improving economic activity in the eurozone and rising corporate profitability in Japan have been catalysts for the move higher in developed overseas stocks, along with a weaker Canadian dollar against the euro.* In emerging markets, AI enthusiasm has gone global, with tech-heavy regions such as Korea and China posting strong gains thus far in 2025.* While much of the gain in overseas stocks was driven by valuation expansion in 2025*, we see scope for earnings growth to play a larger role in 2026. Estimates call for earnings growth of over 10% for stocks in the eurozone, United Kingdom, and China, while stocks in Japan are expected to see earnings growth of about 9%.* Broadening earnings growth helps create an attractive backdrop for equity markets in 2026 and helps reinforce the case for maintaining globally diversified portfolios, in our view.* As part of our opportunistic asset-allocation guidance, we recommend investors take a global approach to overweighting stocks versus bonds by favouring U.S. stocks, developed overseas small- and mid-cap stocks, and emerging-market equity. To view our full suite of portfolio guidance, check out our Monthly portfolio brief. 
   

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet
Japan stocks represented by MSCI Japan. 
Eurozone stocks represented by Euro Stoxx 50
U.K. stocks represented by MSCI U.K.
China stocks represented by MSCI China}

Monday, 12/1/2025 p.m.

• A sluggish start to December – North American equity markets slipped today, kicking off the month on a soft note after an up-and-down November*. The S&P/TSX index fell 0.7%, while south of the border the S&P 500 index was down 0.5%, the technology-focused Nasdaq index fell 0.4%, and the small-cap Russell 2000 index finished 1.1% lower*. This follows a negative tone in global equity markets overnight, with the Japanese Nikkei index down nearly 2% after signals from the Bank of Japan that a rate hike might be on the way, sparking a sharp sell-off in local and global government bond markets*. This negative tone hit Canadian bond markets, with the yield on the 10-year government bond up 8 basis points (0.08%) today*. The Canadian dollar appreciated against its U.S. counterpart, and oil prices were a touch firmer at $59 per barrel*. Gold performed well amid the risk-off tone in markets, with prices up to $4,270 per ounce and now just 2.5% off their November high*. Cryptocurrencies, however, continue to struggle, with bitcoin down more than 6% over the session, reversing much of its recent bounce*.
   
• President Trump has decided on the next Fed chair – President Trump signaled over the weekend that "I know who I am going to pick" when asked who will succeed Jerome Powell as the next chair of the Federal Reserve Bank*. Treasury Secretary Bessant has indicated that a formal nomination could come before Christmas, with the president's chief economic adviser, Kevin Hassett, the heavily rumored frontrunner*. Hassett recently suggested that the Fed should be cutting rates, based on his reading of the current economic data*, although that data flow remains limited for the time being as statistics agencies continue to catch up after an extended closure during a record-breaking government shutdown. Markets are betting on another Fed rate cut, with a 25 basis point reduction (0.25%) now close to 100% priced into short-term money markets, following some dovish comments from Fed policymakers and concerning signals around the labour market in last week's Beige Book report*. Today's ISM manufacturing survey echoed these signals, with firms apparently cutting back on payrolls in this sector over November amid weak order books and rising price pressures*. Activity in the Canadian manufacturing sector remains similarly sluggish, according to the November PMI survey released today*. 
   
• Santa Claus rally on the horizon? – Equity markets have experienced a rollercoaster ride in 2025, with the S&P 500 falling 19% and the TSX falling 13% peak-to-trough in April but quickly regaining those losses to post strong year-to-date gains as we close out November.** While we acknowledge that fundamental factors such as corporate earnings and interest rates—not the calendar—are the primary drivers of markets, December has historically been a strong month for stocks, perhaps suggesting that the 2025 rally has more gas in the tank. Since 1980, the S&P 500 has delivered a positive return in December 71% of the time, with an average gain of 1.2%.*** That compares to positive returns 63% of the time for any month, with an average monthly gain of 0.9%.*** While there’s no guarantee this trend will repeat itself this year, history appears to suggest stocks could end the year on a high note, in our view.
   

James McCann;
Investment Strategy

^{Source: *Bloomberg, **FactSet, ***FactSet, Edward Jones, S&P 500 Price Index.}