The S&P/TSX Composite is Currently Trouncing the U.S. Market

We’ve got ourselves a significant divergence going on.

| More on:
The Motley Fool

It’s turning out to be a very interesting day for North American markets.

In the U.S., it’s another one of those wacko days where strong economic data has led to a sharp decline in the equity market.  The Dow and S&P 500 are currently off by 1.4% and 1.3% respectively.  This strong economic data also sent U.S. Treasury yields soaring as the 10-year hit a two-year high of 2.8%.

The drill is, good economic news is likely to cause the Fed to ease off on the monetary stimulus gas pedal, and this seemingly scares Mr. Market.  Bad is good and good is bad, or something like that.

In Canada on the other hand, the S&P/TSX Composite (TSX:^GSPTSE) is currently up on the day as we have a bunch of things working in our favour.

Gold is currently up big, a full 2.2%.  This has driven the likes of Barrick Gold (TSX:ABX) and Goldcorp (TSX:G) to intraday returns of +4 to 5% each.

Oil is up too, although it’s up slightly less than 1%.  The political unrest in Egypt has the market concerned about the possible impact on global supply.  This has led to a lot of green in the Canadian energy space as shares are being buoyed by the commodity.  Suncor (TSX:SU) was given an added boost when it was revealed that Warren Buffett’s Berkshire Hathaway has made an investment in the firm.

Last but not least is our telecom space.  It’s on a tear after it was announced that Verizon is potentially scaling back on its plan to enter the Canadian market.  This is great news for the likes of Telus (TSX:T) and Rogers (TSX:RCI.B) and their shares are reflecting it.  Each is currently up by 5% and 4% respectively.

Foolish Takeaway

Even though Rogers and Telus are having a great day, the bulk of the work is being done by the resource space.  Because of their heavy-weightings in the TSX, resource 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 owns shares in Barrick Gold and Goldcorp.  The Motley Fool owns shares of Berkshire Hathaway.

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

Oil pumps against sunset
Energy Stocks

Is it a Good Time to Buy in the Energy Sector?

Boosted by a very bullish supply/demand environment, energy stocks like Canadian Natural Resources and Tourmaline have much further to go.

Read more »


2 Stocks to Buy Offering Better Value Than Air Canada

Air Canada has been a popular stock for years, but despite its low price, these two picks are much better…

Read more »

money cash dividends

How to Make $373/Month in Passive Income With These 2 TSX Stocks

You could bring in passive income of $4,482 annually, or $373 per month!

Read more »

clock time
Stocks for Beginners

3 Stocks to Start Investing Today

Looking for a set of stocks to start investing today? Here are some great options that offer growth and income…

Read more »

investment research
Dividend Stocks

Young Investors: Create Cash Flow With This Top Dividend Stock

If you're a young investor looking for cash flow, you need a strong dividend stock and solid banking program designed…

Read more »

Illustration of bull and bear

Is the Stock Market Selloff Over?

Throughout this week, many stocks have been gaining value and rebounding from their lows. So, is the stock market selloff…

Read more »

potted green plant grows up in arrow shape

Retirement 101: How Investors Can Turn $20,000 Into $500,000 in 25 Years

These top TSX dividend stocks have made some investors rich.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

3 Superb Dividend Stocks I’m Ready to Buy

The market is full of great options for income-seeking investors. Here are three superb dividend stocks to buy now.

Read more »