Canadian Stocks Surge To Record Highs After Powell Speech

(RTTNews) - Canadian stocks moved sharply higher during trading on Friday, more than offsetting the pullback seen in the previous session.

After ending Thursday's trading moderately lower, the benchmark S&P/TSX Composite Index surged 248.61 points or 1.1 percent to a new record closing high of 23,286.08.

The rally on Bay Street came as highly anticipated remarks by Federal Reserve Chair Jerome Powell seemingly confirmed expectations that the central bank is prepared to begin lowering interest rates.

"The time has come for policy to adjust," Powell said at the Jackson Hole Economic Symposium, although he noted the "timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."

Powell's determination that it is time for the Fed to begin cutting rates comes as his "confidence has grown that inflation is on a sustainable path back to 2 percent."

The remarks by Powell come as recent inflation data has increased confidence the Fed will cut interest rates at its next monetary policy meeting in September.

According to CME Group's FedWatch Tool, there is a 65.5 percent chance of a quarter point rate cut at the September 17-18 meeting and a 34.5 percent chance of a half point rate cut.

Interest rate-sensitive commercial real estate stocks have helped lead the way higher, with the S&P/TSX Capped REIT Index surging by 2.1 percent.

Considerable strength was also visible among healthcare stocks, as reflected by the 1.6 percent jump by the S&P/TSX Capped Health Care Index.

Financial, materials and energy stocks also saw notable strength, moving higher along with most of the other major sectors.

In Canadian economic news, Statistics Canada released a report showing Canadian retail sales fell by 0.3 percent in June, led by decreases at motor vehicle and parts dealers.

Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, rose by 0.4 percent in June.