Bank Stocks Lead the Way Once Again on the S&P/TSX Composite

Positive momentum out of the U.S. pulls our market higher, again.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

For the second day in a row, Canadian bank stocks were the biggest reason for our market finishing the day in the green.  Today’s move was supported by strong economic data and solid earnings coming out of the U.S.  And the fact that Fed Governor Bernanke’s second day of testimony didn’t indicate that he plans on pulling the punch bowl anytime soon certainly didn’t hurt.

After hitting a bit of a skid a few weeks ago, North American equity markets have more than resumed their upward trajectory.  As the U.S. market has once again breached its all-time highs, with today’s 60 point rise, the S&P/TSX Composite Index (^GSPTSE) is back to where it was at the beginning of June.  However, at 12,268, the Canadian index remains well below its all-time high north of 14,000 set back in June 2008.

The Canadian banks have been doing their part of late to help the TSX garner the same kinds of accolades as the record setting U.S. market.  Royal Bank (TSX:RY), TD (TSX:TD), and Scotia (TSX:BNS) were amongst today’s top 5 contributors with respective gains of 1.5%, 1.5%, and 1.4%.  The banks are potentially benefitting from the reasonably optimistic economic and earnings reports that are coming through in the U.S.  Add in a dash of “the Fed not going anywhere” and you’ve got a recipe for shareholder friendly returns out of these names.

Bank naysayers however were given some ammo today with the news that new home sales in Toronto during the first half of this year were the second-lowest in a decade.  Condos were behind this shortfall.

And even though the price of gold finished up on the day, just like yesterday, Goldcorp (TSX:G) and its 1% slide was the day’s biggest detractor.  After lifting through the morning session, spot gold slid through the afternoon, bringing the mining stocks down with it.  A strong U.S. dollar was behind gold’s trajectory.

Foolish Takeaway

Once again, financials and resources 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.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

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

Payday ringed on a calendar
Dividend Stocks

How to Convert $500 Monthly Investment Into $200 Monthly Income

If you want the stock market to give you regular monthly income, you have to invest in the stock market…

Read more »

falling red arrow and lifting
Investing

RRSP Investors: 3 Dividend Stocks to Buy on the Dip

Inflation has delayed retirement for Canadians. RRSP investors should buy cheap dividend stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS).

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

worry concern
Dividend Stocks

3 Ultra-Safe Dividend Stocks for Jittery Investors

Motley Fool investors nervous about the market downturn should consider these ultra-safe dividend stocks that keep paying passive income no…

Read more »

Economic Turbulence
Cryptocurrency

The TSX’s 1st Crypto ETF Lost $500 Million in 1 Day

The TSX’s first crypto ETF lost $500 million is one day and is down nearly 58% year to date.

Read more »

House Key And Keychain On Wooden Table
Dividend Stocks

Is the Real Estate Boom Finally at an End?

It might be hard to believe, but Canada’s decades-long housing boom might be at an end.

Read more »

stock analysis
Investing

RRSP Investors: 2 Oversold TSX Financial Stocks to Buy for Total Returns

Top TSX financial stocks look oversold right now for RRSP investors seeking attractive dividends and total returns.

Read more »

Investing

Got $500? 3 Undervalued TSX Stocks for Superior Returns

These undervalued stocks have strong potential for growth and will likely generate superior returns in the long term.

Read more »