TORONTO — Strength in the materials sector helped Canada's main stock index finish nearly 170 points higher Tuesday, while U.S. markets also gained ground on a rangebound trading day.
Markets are still digesting U.S. Federal Reserve chair Jerome Powell's speech last week at the Jackson Hole symposium, which suggested there may be an interest-rate cut in September, depending on inflation and labour market data, said Mona Mahajan, head of investment strategy at Edward Jones.
“I think yesterday we gave back a little bit of those gains, and today we're steady as she goes," she said.
"We've been hovering in between gains and losses, but when you look underneath the surface from a sector perspective here in the U.S., you continue to see interest-rate-sensitive sectors lead the way — industrials, health care, financials, materials, all higher.”
She noted markets will be digesting earnings and economic data points this week, with U.S. tech heavyweight Nvidia set to report its latest results on Wednesday and U.S. inflation data set to be released on Friday.
U.S. markets remained subdued following U.S. President Donald Trump's escalation of his fight with the Federal Reserve. On Monday, he said he’s removing Federal Reserve governor Lisa Cook, who has said she will not resign.
It marks the latest escalation in his dispute with the central bank over its cautious interest rate policy. The Fed has held rates steady since late 2024 over worries that Trump's unpredictable tariff policy will reignite inflation. Trump has also threatened to fire Powell, often taunting him with name-calling. Still, he is only one of 12 votes that decides interest rate policy.
“I think overall markets are hoping that the Fed independence remains in place. It's a more stabilizing force in the market to know that the Fed is making decisions that are data-driven,” Mahajan said.
The S&P/TSX composite index was up 169.94 points at 28,339.88.
In New York, the Dow Jones industrial average was up 135.60 points at 45,418.07. The S&P 500 index was up 26.62 points at 6,465.94, while the Nasdaq composite was up 94.98 points at 21,544.27.
On the TSX, investors responded positively to the start of bank earnings, with the financials sector posting the second-best performance on the day, behind only basic materials.
Bank of Nova Scotia gained 6.88 per cent on the day, after reporting a third-quarter profit of $2.53 billion, up from $1.91 billion a year earlier. Meanwhile, BMO Financial Group rose 4.53 per cent, after reporting $2.33 billion in net income, up from $1.87 billion a year earlier.
“Generally speaking, I think there's a little bit of relief, especially with Canadian banks. As the economy has softened, there's some uncertainty around inflation and the state of consumer and corporate lending in Canada, the housing market being a big part of that,” Mahajan said.
The Canadian dollar traded for 72.27 cents US compared with 72.28 cents US on Monday.
The October crude oil contract was down US$1.55 at US$63.25 per barrel. The December gold contract was up US$15.50 at US$3,433 an ounce.
This report by The Canadian Press was first published Aug. 26, 2025.
— With files from The Associated Press
Companies in this story: (TSX:GSPTSE, TSX:CADUSD, TSX:BNS, TSX:BMO)
Daniel Johnson, The Canadian Press
