North American stock markets almost recover from last week's big losses

TORONTO — North American stock indexes have almost recovered from last week's steep losses after moving higher midweek on some strong earnings results.

The S&P/TSX composite index closed up 95.92 points at 16,309.23, about 30 points shy of where it was before last week's major drops.

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In New York, the Dow Jones industrial average was up 240.29 points at 26,202.73. The S&P 500 index was up 23.92 points at 2,924.43, while the Nasdaq composite was up 71.65 points at 8,020.21.

The markets moved up after a few U.S. companies like Target and Lowe's soared after beating expectations, said Anish Chopra, managing director with Portfolio Management Corp.

"We had strong earnings from a few companies...and part of it's also a bounce back from last week's challenging markets," he said in an interview.

Minutes from last month's Federal Reserve meeting failed to move markets much. The central bank cut interest rates for the first time since before the financial recession even as a couple of members wanted a 50 basis point cut and a couple saw no need to cut rates at all.

The Fed "wanted to avoid the appearance that they're on the path for more rate cuts so it was really a recalibration and it wasn't like a part of a preset course for just every meeting" that rates would increase by 25 basis points, Chopra said.

Investors will be watching closely as Fed chairman Jerome Powell is expected to provide commentary on interest rates Friday at a symposium in Jackson Hole, Wyo.

The Canadian dollar rose to its highest level in about a week after Canada's annual inflation hit the Bank of Canada's target of two per cent for a second straight month in July.

The loonie traded for an average of 75.31 cents US compared with an average of 75.06 cents US on Monday.

"That takes some pressure off the Bank of Canada from having to reduce rates," Chopra said, adding that it's just one of many data inputs the bank will consider. "But the fact that inflation is right at the Bank of Canada target, as opposed to well under it, just means that interest rates may just stay where they are for awhile."

Eight of the 11 major sectors of the TSX were higher, led by information technology. It rose 1.85 per cent as Shopify Inc. hit an all-time high of $519.69 and closed up four per cent at $519.07. That's up 225 per cent from the 52-week low.

Also rising were health care, energy, industrials and financials.

The key energy sector climbed 0.95 per cent despite a dip in crude oil prices as Kinder Morgan Canada Ltd. surged 31.6 per cent after Pembina Pipeline Corp. announced it would buy the company the U.S. portion of the Cochin pipeline system in deals it valued at a total of about $4.35 billion.

The October crude contract was down 45 cents at US$55.68 per barrel and the September natural gas contract was down 4.8 cents at US$2.17 per mmBTU.

"The whole energy sector has had one of the toughest rolling decade returns that it's ever had since the Great Depression so it's been a difficult period when it comes to valuations for the energy sector," Chopra added.

"So to see them bounce up even though you've had a down day in oil it just makes sense because the valuations are so low."

Financials was up as shares of the Royal Bank of Canada increased its dividend as its third-quarter profit rose by five per cent to hit a record, but the lender's latest earnings missed estimates as challenging market conditions weighed on its capital markets division.

Materials was lower even though the December gold contract was unchanged at US$1,515.70 an ounce and the September copper contract was up 0.75 of a cent at US$2.59 a pound.

Companies in this story: (TSX:SHOP, TSX:KML, TSX:PPL, TSX:RY, TSX:GSPTSE, TSX:CADUSD=X)

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