Key Developments:

  • CPI came in at 3% vs. expected 2.8%, pushing 10-year yields to 4.63%
  • NASDAQ Composite gained 2.58% WoW, outpacing S&P 500's 1.47% advance
  • TSX Composite declined 0.84% to 25,483.23, pressured by mining sector weakness

The week's trading action highlighted a stark contrast between U.S. and Canadian markets. While tech stocks continued their AI-driven rally, with Nvidia leading gains on its Grace Blackwell system announcement and Dell eyeing a potential $5B xAI contract, the resource-heavy TSX faced headwinds. The financial sector showed remarkable resilience with 51.8% earnings growth, despite persistent rate concerns following the hotter-than-expected inflation data.

Sector Performance:

Tech Leadership: The technology sector continues to dominate, with AI infrastructure players showing particular strength. Nvidia's surge and Dell's potential xAI contract underscore the sector's momentum.

Mixed Financials: Despite rate pressures, financial stocks demonstrated robust earnings growth, suggesting the sector's adaptability to the current rate environment.

Resources Pressure: Mining stocks faced significant pressure, with major players like Agnico Eagle and Barrick Gold leading the decline, although rising oil prices provided some support to energy names.

Strategic Playbook:

For Short-Term Traders:

  • Consider implementing pair trades: Long NASDAQ/Short TSX to capitalize on the current technological momentum
  • Watch for oversold conditions in mining stocks, as inflation hedge demand could spark a rebound
  • Monitor key technical levels on the TSX around 25,250 for potential support

For Long-Term Investors:

  • Maintain strategic exposure to AI infrastructure companies
  • Consider gradual accumulation of Canadian energy names benefiting from oil price stability
  • Diversify holdings across sectors showing earnings growth momentum

Looking Ahead:

Upcoming catalysts include earnings reports from market movers like Walmart, Alibaba, and Arista Networks. Traders should closely monitor the Fed's response to persistent inflation data and potential impacts from Trump administration tariff decisions on US-Canada trade relations.

Risk Factors:

  • Further inflation surprises could accelerate rate hike expectations
  • Canadian real estate sector remains vulnerable to higher rates
  • Geopolitical tensions and trade policy shifts could impact market sentiment