Wednesday, 4/29/2026 p.m.

  • Stocks trade slightly lower with central-bank policy and corporate earnings in focus – North American equity markets closed mostly lower Wednesday, following the Bank of Canada and Federal Reserve's decision to leave their policy rates unchanged at today's meetings. Most sectors closed the day flat to lower, with energy leading amid another move higher in oil prices. Overseas, Asian markets were mostly higher overnight, led by a 1.7% gain in Hong Kong’s Hang Seng Index, while European equities finished modestly lower. On the economic front, U.S. investment trends appeared steady in March. Headline durable goods orders rose 0.8% for the month, above expectations for a 0.4% gain, while housing starts increased 10.8%, well ahead of expectations for a modest contraction. Government bond yields traded higher on the day, with the 10-year GoC yield rising to 3.60% and the 10-year U.S. Treasury yield at 4.41%. In commodities, oil prices closed higher, with WTI settling around $108 per barrel after reports surfaced that the U.S. is preparing to extend its naval blockade of Iranian ports.
     
  • Bank of Canada and Fed hold rates steady – The Bank of Canada left its policy rate unchanged this morning at 2.25%, marking its fourth consecutive meeting on hold. In its statement, the BoC highlighted the war in the Middle East and U.S. trade policy as ongoing sources of economic uncertainty. The central bank noted that, in the current environment, it is prepared to look through the near-term inflationary impact of higher energy prices, but emphasized that it will not allow elevated energy prices to translate into persistently higher inflation. In the opening statement of his press conference, Governor Tiff Macklem acknowledged that if oil prices remain elevated, consecutive increases in the policy rate could become necessary. In response, short-term GoC yields rose, with the 2-year yield climbing 0.15% on the day to over 3%. In our view, the BoC is likely to remain on hold in the near term, particularly as uncertainty around CUSMA negotiations persists and economic activity remains subdued.

    South of the border, the Fed maintained its target range for the federal funds rate at 3.50%–3.75% at today’s meeting, as expected. The Federal Open Market Committee statement also maintained its easing bias, signaling that the next move in the policy rate is more likely to be lower than higher. However, three members voted to remove the easing bias from the statement, while one member voted to lower the federal funds target range by 0.25%, highlighting divergent views among FOMC members amid the uncertain economic backdrop. Additionally, Fed Chair Jerome Powell announced that he will continue to serve on the Fed’s Board of Governors after his term as Fed chair ends next month, at least until the investigation into the Federal Reserve is “fully and transparently resolved.” The announcement follows this morning’s Senate Banking Committee vote to advance Kevin Warsh’s nomination to take over as Fed chair when Powell’s term ends. With U.S. inflation running above target for five years and the labour market showing signs of stabilization, we believe the Fed is likely to remain on hold in the near term. However, if energy prices decline and geopolitical tensions ease toward year-end, we believe the Fed could deliver another interest-rate cut before the end of the year.
     
  • Earnings in focus – First-quarter earnings season is in full swing this week, with more than 150 S&P 500 companies scheduled to report. Key reports include Amazon, Alphabet, Microsoft and Meta after today’s market close, followed by Apple after the close tomorrow. Results have been solid so far. S&P 500 first-quarter earnings are now expected to grow 14% year-over-year, up from estimates of roughly 12% at the end of March. Strong earnings growth is also expected to continue through the remainder of 2026, with full-year S&P 500 earnings projected to rise 18.7%, compared with expectations of about 15% at the start of the year. The upward revision has been driven largely by a nearly 40% increase in expected earnings per share for the energy sector, reflecting the higher oil-price backdrop. Materials and technology have also seen 2026 earnings estimates rise by more than 11%. While estimates have moved modestly lower in sectors that may be pressured by higher oil prices, including consumer staples and consumer discretionary, these downward revisions have been more than offset by stronger expectations in energy, materials and technology. Despite pockets of downward revisions since the start of the year, earnings growth is still expected to be positive across all 11 S&P 500 sectors in 2026. In our view, robust earnings growth, supported by healthy economic activity and continued strength in AI-related spending, should remain a key support for equity markets over the balance of the year.

Brock Weimer, CFA;
Investment Strategy

Source for all data: FactSet 

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