Banks Push the S&P/TSX Composite Higher

All Fed, all the time market action continued on Tuesday.

| More on:
The Motley Fool

We closed yesterday’s bit of market commentary with an indication that the market is all about the Fed, all the time.  Today, Fed Governor Bernanke made some remarks that economic stimulus could slow towards the end of the year, but the timetable for reducing open market bond purchases is not on a “preset course”.  Once those two words left the Bernank’s mouth, they immediately became today’s words of the day and helped buoy North American markets throughout the afternoon.

The S&P/TSX Composite (^GSPTSE) did its best to at least eclipse the searing temperature readings here in the nation’s financial capital, posting a gain of 52 points, or 0.41%.

Helping to drive our market higher, as suggested by the title, were all 5 of the big Canadian banks.  Royal Bank (TSX:RY), Scotia (TSX:BNS) and TD (TSX:TD) were today’s top 3 contributors, booking gains of 2.0%, 1.6%, and 0.8% respectively.  Seemingly, bank investors interpreted today’s words of the day as a positive.

Gold investors on the other hand, not so much.  After enjoying a healthy start to the week, gold shares were today’s laggards as spot gold closed down 1.2%.  This, after the commodity enjoyed a momentary spike right after Bernanke’s testimony began.  As his words were dissected however, the U.S. dollar began to rise, and gold suffered its worst decline in more than a week.

The usual suspects therefore created the biggest drag on today’s market.  Goldcorp (TSX:G) was the biggest detractor, registering a 1.9% decline.

Foolish Takeaway

Financials and resources once again had a significant impact on our market’s performance.  Because of their heavy-weightings in the TSX, these stocks can be harmful for those investors that think they are well-diversified with an index fund or ETF linked to the S&P/TSX Composite Index.

We have prepared a Special FREE Report that will clue you into the perils of passively investing in the Canadian index and suggests an easy to implement alternative strategy.  The report is called “5 Stocks That Should Replace Your Canadian Index Fund”.  One of these 5 is in the process of being taken over at a huge premium.  You can find out who the remaining 4 are simply by clicking here.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler is short July 2013 $32 put options on Goldcorp.  The Motley Fool doesn’t own shares in any of the companies mentioned.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

funds, money, nest egg
Investing

Retirees: 3 Canadian Stocks You Can Confidently Own for the Next 20 Years

Here's why retirees need to plan beyond 20 years in retirement. Fortis Inc. (TSX:FTS), Royal Bank of Canada (TSX:RY) stock…

Read more »

Question marks in a pile
Tech Stocks

Should You Invest in Absolute Software Stock Right Now?

Absolute Software (TSX:ABST) is a tech stock that is worth your attention, as it offers exposure to exciting security markets.

Read more »

Dividend Stocks

1 Oversold Dividend Stock I’d Buy in December 2022

Here’s one of the best Canadian dividend stocks to buy in December that I find undervalued.

Read more »

Investing

FOR TUESDAY – 3 TSX Stocks to Buy Today and Hold for the Next 3 Years

Given their growth prospects, these three TSX stocks could outperform over the next three years.

Read more »

Supermarket aisle with empty green shopping cart
Stocks for Beginners

Is Dollarama Stock a Buy at All-Time Highs?

Dollarama stock (TSX:DOL) remains at all-time highs while the rest of the market drops. Does this mean it's due to…

Read more »

Online shopping
Tech Stocks

Should You Buy Shopify Stock If the Rate Hike Cycle Slows?

Is SHOP stock a buy after its 72% drop this year?

Read more »

A bull outlined against a field
Investing

2 Canadian Stocks Set to Soar in a New Bull Market

Consider Sleep Country Canada Holdings (TSX:ZZZ) stock and another mid-cap bargain, as the bear market moves on.

Read more »

Gold bars
Metals and Mining Stocks

Better Buy: Newmont or Barrick Gold Stock?

If you think better days are ahead for gold miners, consider exploring gold stocks Newmont and Barrick Gold.

Read more »