Market week: Momentum pushes stocks higher

Market week: Momentum pushes stocks higher

Stocks defy rising yields, inflation to touch record highs


Rising inflation and higher bond yields did not significantly deter equity investors last week, as the major North American indexes logged gains on the week, also again touching fresh record highs, driven by estimate-beating quarterly earnings reports. Friday’s session dampened weekly gains somewhat as remarks by U.S. Federal Reserve Board Chair Jerome Powell suggested policy tightening as early as next year as full U.S. employment looms on the horizon.

Canada’s headline all-items consumer price index rose at an annual 4.4% in September, the fastest pace since 2003. U.S. all-items index climbed to 5.4% in September. The yield on the bellwether U.S. 10-year Treasury Note climbed to 1.7% on Thursday, before easing off to end Friday at 1.6%. Canadian bond yields also spiked, as the 10-year Government of Canada bond rose to 1.7% on Friday before easing back to 1.6%.

The S&P 500 Composite Index posted a gain of 1.7% on the week, as over 80% of S&P 500 quarterly earnings reported so far have exceeded street estimates. However, a selloff in large-cap tech stocks dampened gains somewhat on Friday. Shares of Snapchat parent Snap Inc. and chip manufacturer Intel Inc. fell on weaker guidance from the companies, leading to downdraft in the technology sector on Friday. Despite that, the Nasdaq Composite Index logged a gain of 1.3% on the week. Toronto’s benchmark S&P/TSX Composite Index posted a 1.4% week-over-week advance, with strong gains in industrials, financials, and healthcare. A weekly gain of 1.6% in the price of crude oil kept the energy sector afloat but without any significant weekly advance, while gold remained relatively quiet with a 1.4% gain on the week.

Fund news

* Purpose plans new crypto ETFs. Purpose Investments Inc. on Oct. 20 announced that it had filed preliminary simplified prospectuses and annual information forms for three new actively managed cryptocurrency ETFs.

Purpose Crypto Opportunities ETF will invest primarily in publicly listed securities (including investment funds) and derivative instruments that provide exposure to digital assets (including Bitcoin and/or Ether), with the objective of long-term capital growth.

Purpose Bitcoin Yield ETF aims to provide both monthly distributions and long-term capital appreciation. The fund will obtain direct and/or indirect exposure to Bitcoin and implement a derivatives-based strategy on its holdings.

Purpose Ether Yield ETF aims for monthly income and long-term capital growth by obtaining direct and/or indirect exposure to Ether and by implementing a derivatives based strategy.

Purpose also announced that it will be launching the Purpose DeFi Opportunities Fund as a privately-offered fund focused on providing exposure to the growing opportunities in decentralized finance and the unique DeFi investment universe.

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