Canada's main stock index witnessed a remarkable feat on Friday as it hit a record high. This upward trajectory was primarily driven by technology shares. The domestic unemployment rate's more-than-expected rise played a significant role in boosting bets for a substantial Bank of Canada interest rate cut in the coming week. At 10:54 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index showed an increase of 93.18 points, or 0.36%, reaching 25,772.97. It was on track to achieve its fifth consecutive weekly gain.

Market Reactions and Bets

Money markets are now heavily wagering on a 50 basis point BoC rate cut next week following the day's jobs data. Canada's unemployment rate rose to 6.8% in November, surpassing expectations and reaching a near-eight-year high (excluding pandemic years). This development enhanced the likelihood of a large interest rate cut at the BoC's Dec. 11 policy meeting. Graham Priest, an investment advisor at BlueShore Financial, stated, "The chances of another 50-basis-point rate cut are definitely a lot stronger. I feel that's what the market is responding to this morning." Bets for a hefty half-point rate cut now stand at 80%, up from 49% earlier in the day. The BoC has already reduced its key policy rate by a cumulative 125 basis points this year in an effort to stimulate economic growth. Priest added, "We've had a very strong performance this year and there does seem to be the expectation that it will continue into 2025." Indeed, the TSX is up 23% for the year.

Sectors and Performances

Among sectors, information technology took the lead in gains, rising by 2.1%. This was boosted by a 6.1% jump in e-commerce firm Shopify. The heavyweight financials sector also rose by 0.4%, with Laurentian Bank jumping 7.8% after exceeding quarterly profit estimates and Bank of Montreal gaining 4.2% following an upgrade by CIBC. In contrast, the energy sector fell 2% as oil prices slipped over 1%.

Wall Street's Performance

Wall Street's main indexes edged higher on Friday. The S&P 500 and the Nasdaq touched intraday record highs as traders increased their bets on a Federal Reserve rate cut this month following robust November payrolls data. U.S. job growth surged in November after being severely constrained by hurricanes and strikes. However, this is unlikely to indicate a significant shift in labor market conditions, which are continuing to ease steadily. This allows the Fed to cut interest rates again this month. Josh Jamner, an investment strategy analyst at ClearBridge Investments, said, "This jobs report came out right in the Goldilocks zone – not too hot so as to derail interest-rate cuts in December (or next year), but also not too cold, which could have spooked financial markets about the underlying health of the U.S. economy." Traders boosted their bets that the U.S. central bank would cut interest rates this month. Now, there is a more than 90% chance of a 25-basis-point rate cut at the Fed's upcoming Dec. 17-18 meeting, compared to 67% before the jobs report was released.

Other Market Movements

Meanwhile, a preliminary reading of the University of Michigan's U.S. consumer sentiment survey stood at 74 in December, compared with an estimate of 73 according to economists polled by Reuters. The Dow Jones Industrial Average rose 49.46 points, or 0.11%, to 44,815.17. The S&P 500 gained 22.11 points, or 0.36%, to 6,097.33, and the Nasdaq Composite added 142.28 points, or 0.72%, to 19,843.00. Most megacap and growth stocks rose, with Tesla and Amazon up 1.1% and 1.4%, respectively, pulling the Consumer Discretionary sector up 1.3% to a record high. Lululemon Athletica also added 17.2% after the Canadian sportswear maker increased its full-year forecasts, betting on resilient demand for its athletic wear. Fed officials including San Francisco President Mary Daly are scheduled to make public appearances throughout the day, on the eve of a media blackout that begins on Saturday in the lead-up to the central bank's Dec. 17-18 policy meeting. U.S. stocks closed lower in the last session, with UnitedHealth down sharply and technology shares giving up some gains after a steady increase through the week. Despite Thursday's pullback, the S&P 500 and the Nasdaq were on track for their third consecutive weekly gains, while the blue-chip Dow was set for minor losses. The three indexes have rallied this year as investors bought into heavyweight tech stocks in a bid to capitalize on the euphoria around artificial intelligence. U.S. President-elect Donald Trump's win in the Nov. 5 election has provided further tailwinds for stocks. Analysts expect his tax-cut policies and looser regulations to support corporate performance. Ulta Beauty advanced 12.1% after the cosmetics retailer raised its annual profit forecast, signaling a revival in demand for perfumes and makeup during the holiday shopping season. Advancing issues outnumbered decliners by a 1.81-to-1 ratio on the NYSE, and by a 1.97-to-1 ratio on the Nasdaq. The S&P 500 posted 20 new 52-week highs and four new lows, while the Nasdaq Composite recorded 67 new highs and 37 new lows.