Canadian stocks saw a significant upturn on Friday, recovering from the losses experienced in the previous session.
The benchmark S&P/TSX Composite Index concluded Friday trading with a robust gain of 248.61 points, or 1.1%, reaching a record closing high of 23,286.08 after a modest decline on Thursday.
The surge on Bay Street was fueled by pivotal comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium, hinting that the central bank is poised to begin reducing interest rates.
"It's time for policy adjustment," Powell remarked, while emphasizing that "the timing and pace of rate cuts will depend on incoming data, evolving economic outlook, and risk assessments."
Powell's assertion to initiate rate cuts stems from a rising confidence that inflation is headed back to a stable 2%.
His statements align with recent inflation data, bolstering the belief that the Fed will lower interest rates at its forthcoming monetary policy meeting in September.
According to the CME Group's FedWatch Tool, there stands a 65.5% probability of a quarter-point rate reduction and a 34.5% probability of a half-point cut at the September 17-18 meeting.
Interest rate-sensitive sectors, particularly commercial real estate, led the gains, with the S&P/TSX Capped REIT Index climbing by 2.1%.
Healthcare stocks also exhibited robust performance, as the S&P/TSX Capped Health Care Index soared by 1.6%.
Financial, materials, and energy stocks showed marked strength, joining other major sectors in the upward momentum.
In economic developments, Statistics Canada reported a 0.3% decline in retail sales for June, primarily driven by lower sales at motor vehicle and parts dealers.
However, core retail sales, excluding gasoline stations and motor vehicle and parts dealers, saw a 0.4% increase in June.
