Daily market snapshot

Wednesday, 12/17/2025 p.m.

• Stocks finish mixed amid tech weakness – Canadian stocks were little changed on Wednesday while U.S. equity markets closed lower, with weakness in mega-cap technology weighing on markets.* The pullback in tech was sparked by reports that one of Oracle's data center projects could potentially be in jeopardy after the company’s financing agreement fell through, driving a 1.8% loss for the NASDAQ.* The energy sector was an outperformer, supported by a jump in oil prices following U.S. President Trump’s announcement of a blockade of Venezuelan-sanctioned oil tankers.* Strength in the energy sector provided support to Canadian markets with the TSX finishing near the flatline.* It was a quiet day on the economic calendar, but key data is on the horizon as investors await tomorrow’s U.S. CPI inflation report for November and Friday's domestic retail sales report. Overseas, Asian markets moved higher overnight after better-than-expected export data from Japan, while European markets finished mixed following cooler-than-expected November inflation in the U.K.* Bond yields were little changed, with the 10-year U.S. Treasury yield closing around 4.15% while the 10-year GoC yield finished at 3.39%.*
  
  Broadening earnings growth expected in 2026 – 2025 has been another strong year for equity markets, with the TSX on track for its best performance since 2009 and the S&P 500 on pace to notch its third consecutive annual gain of more than 15% including dividends.* From a leadership perspective, familiar faces have dominated in the U.S., as the technology and communication services sectors have led the way, each up over 20% in 2025, while in Canada, the materials sector has surged more than 90% year-to-date, supported by a sharp rise in gold prices.* Unsurprisingly, these three sectors have also delivered the strongest earnings growth this year within their respective indexes, with profits on track to rise more than 15% for technology and communication services in the U.S., and materials on pace for earnings growth of more than 70% in Canada.*
  
  In 2026, earnings growth is expected to remain robust in U.S. technology and communication services, with both sectors projected to deliver another year of double-digit profit gains.* Importantly, all eleven sectors of the S&P 500 are expected to see positive earnings growth in 2026, with value-oriented sectors such as industrials and materials forecasted to grow earnings by more than 14%.* Similarly, in Canada, positive earnings growth is anticipated across all eleven sectors of the TSX, led by materials, while sectors such as industrials, utilities, and technology are expected to post earnings growth of 16% or more.*
  
  In our view, this could lead to a broadening of market leadership, reinforcing the case for diversification. As part of our U.S. opportunistic equity sector guidance, we recommend overweight positions in consumer discretionary, health care, and industrials, offset by underweights in consumer staples and utilities. For Canadian opportunistic equity sector guidance, we recommend overweight positions in energy, industrials, and materials, offset by underweights in technology, communication services, consumer discretionary, and consumer staples. To view our full suite of portfolio guidance, check out our Monthly Portfolio Brief.  
   
• Bonds on pace for another year of positive returns – After posting a 11% decline in 2022—the worst year on record for the Bloomberg Canada Aggregate Bond Index—Canadian investment-grade bonds are on pace for a third consecutive year of positive returns, up roughly 2% year to date despite a spike in yields following the November employment report.* Credit-sensitive segments of fixed income have also delivered strong performance, with international high-yield bonds higher by nearly 7%.* Based on our outlook for healthy global economic and corporate profit growth, we believe equity markets offer more attractive opportunities relative to fixed income as part of our opportunistic asset allocation guidance. However, bonds continue to play a valuable role in a portfolio by providing diversification benefits and generating income, in our view. 
   

Brock Weimer, CFA;
Investment Strategy

^{Sources: *FactSet}

Tuesday, 12/16/2025 p.m.

• Stocks finish mixed on Tuesday – North American equity markets finished mixed on Tuesday, as investors digested the latest U.S. employment data, which showed nonfarm payrolls increased 64,000 in November while the unemployment rate rose to 4.6%.* Growth-oriented sectors such as technology and consumer discretionary  outperformed, leading to a modest gain for the Nasdaq on the day, while value-oriented sectors such as health care and energy were among the laggards, with weakness in energy stocks weighing on the TSX.* Overseas, stocks in Asia were lower overnight, while European markets closed lower as well despite economic sentiment in Germany rising to a five-month high.* Bond yields finished slightly lower, with the 10-year U.S. Treasury yield falling to around 4.15% while the 10-year GoC yield fell to 3.36%.* In commodity markets, oil prices fell over 2% amid hopes for a Russia-Ukraine peace deal.*
   
• Mixed data in the rearview mirror – Today brought a wave of U.S. economic data which had been delayed due to the government shutdown. On the consumer side, headline retail sales were little changed in October, as expected.* However, control-group retail sales—which exclude more volatile categories such as gas stations, motor vehicle and parts dealers, and building materials and garden equipment stores—rose a solid 0.85%, beating expectations for a 0.35% gain.* On the employment front, U.S. nonfarm payrolls increased by 64,000 in November, above the 50,000 forecast, though the unemployment rate climbed to 4.6%, the highest since October 2021.* The rise in unemployment largely reflects an expanding labour force rather than falling employment,* suggesting new entrants may be struggling to secure jobs, in our view. In 2026, we expect the U.S. labour market to remain in the slow lane, with payroll growth averaging 50,000–100,000 per month. Even so, economic conditions should stay broadly supportive, in our view, aided by monetary and fiscal easing, strong tech and AI investment trends, and a year with potentially less political uncertainty. Under this backdrop we see U.S. real GDP settling near 2% in 2026.
   
• U.S. inflation data on the horizon – U.S. inflation will be in focus this week, with November consumer price index (CPI) data due Thursday. Expectations call for headline and core CPI to rise 3.1% year-over-year, following September’s 3% annual gain.* The October CPI report will not be released due to the U.S. government shutdown. In 2026, we expect inflation to remain in the 2.5%–3% range, as rising goods prices are likely partially offset by gradually moderating services inflation, which makes up the bulk of the CPI basket. While U.S. inflation is likely to stay above the Fed’s 2% target, we believe the Fed can deliver one or two additional rate cuts in 2026 as labour-market conditions cool. In our view, the combination of further monetary easing and modest fiscal support should underpin steady U.S. economic growth in 2026.

Brock Weimer, CFA;
Investment Strategy

^{Sources: *FactSet}

Monday, 12/15/2025 p.m.

• Stocks stumble – Following a bright start, we saw major equity indexes sell off over the course of Monday, adding to the declines seen at the end of last week*. In the U.S. large-cap space, weakness was concentrated in some large technology names, with further declines in Oracle and Broadcom adding to those seen after last week's third-quarter earnings reports*. These dynamics weighed on the technology-sensitive Nasdaq index, which fell 0.6% over the day and is now down 2.2% over December so far*. Small-cap stocks, which have generally outperformed in recent weeks, also struggled, with the Russell 2000 index down 0.7%*. Still, this benchmark remains up 1.3% month to date, benefiting from a rotation away from large-cap technology stocks*. In Canada, the S&P/TSX  closed 0.1% lower, with this index now broadly flat over December, but still up more than 27% year-to-date*. Government bonds rallied in the wake of softer-than-expected inflation data, with the yield on 2-year and 10-year government bonds down 3 basis points (0.03%), although 10-year yields at 3.4% remain close to the upper end of the 3%-3.5% range seen through much of 2025*. Gold was a touch higher, with prices approaching the record highs seen in October, while oil continues to drift lower, with WTI trading at $57 per barrel, a 2025 low*.
   
• Inflation cooled in Canada – Headline inflation held steady last month, at 2.2% y/y (year-over-year), but closely followed measures of underlying price pressures cooled*. The Bank of Canada's median and trimmed mean gauges of core inflation both decelerated to 2.8% y/y from 3% y/y in October, with the three-month annualized growth rates of these moderating even more to 2.3%*. These data suggest some signs that inflation is moving more sustainably toward the middle of the 2%-3% range targeted by the Canadian central bank, in our view. Slowing inflation could temper some of the building market expectations for an interest-rate hike in Canada toward the end of next year*. With growth expected to remain sluggish and trade-policy uncertainty high against the backdrop of a CUSMA renegotiation in our view, we would expect the central bank to leave interest rates on hold at a moderately supportive 2.25% through the course of 2026.
   
• Dollar drifting lower toward the end of the year – The U.S. dollar has had a difficult year. Following a prolonged bull run which pushed the currency to multi-decade highs, we have seen a correction in the greenback*. This has pushed the dollar down 9.4% against a trade-weighted basket of international currencies, and the dollar has been drifting lower through December*. We think that part of the U.S. dollar success story in recent years has related to a perceived U.S. exceptionalism, with higher growth, interest rates and equity returns compared to other parts of the world all helping create demand for dollar-denominated assets. Aspects of this story appear to have moderated in 2025, with U.S. growth slowing, the Fed cutting interest rates, and some international markets delivering robust returns. In part, we think the performance of the dollar in 2026 will likely depend on how many more interest-rate cuts we might see from the Fed. We think there is scope for one or two more moves, broadly in line with market pricing*, but a more aggressive easing could add to dollar downside, in our view.
   

James McCann;
Investment Strategy

^{Sources: *Bloomberg}

Friday, 12/12/2025 p.m.

• Stocks drop amid tech weakness - Major indexes retreated from record highs as the pullback in mega-cap tech stocks weighed on the Nasdaq, which finished 1.7% lower*. Broadcom reported earnings that beat expectations, but shares fell 11% on profitability concerns and questions around AI-related growth after a 70% rally earlier this year*. A key theme as markets close out the year is a rotation out of tech and into sectors that could benefit from steady economic growth and anticipated Fed easing*. Bonds also declined as the 10-year GoC yield rose to 3.44%*.
   
• Fed's balanced message lands well with investors - The Fed’s two-day meeting earlier this week was the last major market catalyst before year-end, and the outcome largely met expectations. The Fed cut its benchmark rate by a quarter point to 3.5%–3.75%, marking its third straight reduction*. While officials differ on the longer-term path, they maintained projections for one cut in 2026 and another in 2027*. Solid growth and inflation still above target suggest a possible pause in January, in our view, but the easing cycle likely isn’t over. Based on comments from his press conference, Chair Powell’s optimism on productivity and tariff-driven goods inflation appeared to reinforce that view. The Fed also announced it will buy $40 billion in short-term Treasuries over the next 30 days to replace maturing bills and keep its balance sheet steady. Next week, attention likely shifts to delayed U.S. CPI and jobs reports for October and November, though in his comments Powell warned of quality issues due to data collection distortions. In Canada, the November CPI is scheduled to be released on Monday, with consensus looking for a slight uptick from 2.2% to 2.3%*. The BoC's core measures remain higher, which suggests that the bank's rate-cutting cycle has likely concluded.
   
• Sector rotation underscores case for diversification in '26 - The Magnificent 7 group of mega-cap companies slipped this week after shares of both Oracle and Broadcom declined post-earnings*. Broadcom's results that were released last night exceeded expectations, but the company's CEO held off on giving an annual revenue forecast, which fed to the recent skepticism around lofty AI targets*. While tech takes a breather, investors appear to be rotating into areas with lower valuations and support from Fed easing, like small-caps and cyclicals. Both the equal-weight S&P 500 and Russell 2000 hit new highs before today's pullback, even as the tech-heavy Nasdaq remained below its late-October peak*. Looking ahead, AI should remain a major driver in 2026, in our view, but markets look to be broadening—within tech and beyond—with solid earnings across sectors and regions*. This can create opportunities for diversification, which we believe is key to building portfolio resilience.

Angelo Kourkafas, CFA;
Investment Strategy

^{Sources: *FactSet}

Thursday, 12/11/2025 p.m.

• Markets finish higher following Fed rate cut – The TSX and U.S. equity markets closed higher on Thursday, led by gains in materials and financial stocks that reversed an early pullback. Communication and technology stocks lagged as cloud-computing leader Oracle fell sharply after reporting disappointing second-quarter revenue and continued heavy capital expenditures*. Overseas, Asia dipped overnight, while European stocks traded broadly higher as Switzerland's central bank held its policy rate steady at 0%, in line with estimates*. The U.S. dollar weakened against major currencies. In commodities, WTI oil declined as markets weighed the implications of the U.S. seizure of a sanctioned oil tanker off the coast of Venezuela*.
   
• Jobless claims mixed – U.S. initial jobless claims rose to 236,000 this past week, above estimates of 213,000 and marking the highest reading in three months*. Continuing claims, which track the total number of people receiving benefits, fell to 1.84 million from 1.94 million, coming in below forecasts to hold roughly steady*. We believe this data confirms that the labour market continues to cool but is not collapsing. The unemployment rate remains modest at 4.4%, while job openings expanded in October to 7.7 million, slightly above unemployment of 7.6 million*. In our view, wage gains should continue to outpace inflation, providing positive real wages to sustain consumer spending and the broader economy.
   
• Bond yields mixed – Bond yields were mixed, with the 10-year Government of Canada yield down to 3.39% and the 10-year U.S. Treasury yield edging higher to 4.14%. Following yesterday's Fed rate cut, bond markets are pricing in expectations for two additional cuts to the fed funds rate next year** — exceeding the Fed's own forecast for one cut***. Lower interest rates should reduce borrowing costs for consumers and businesses, which we believe will support the economy and corporate profitability.
   

Brian Therien, CFA;
Investment Strategy

^{Sources: *FactSet **CME FedWatch ***U.S. Federal Reserve}