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Record Highs for North American Stock Markets

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  Published in Stocks and Investing on Saturday, February 7th 2026 at 18:45 GMT by Toronto Star
      Locales: CANADA, UNITED STATES

Toronto, Canada - February 7th, 2026 - North American stock markets continued their upward trajectory on Friday, with both Canadian and U.S. indices reaching unprecedented levels. The S&P/TSX Composite Index in Toronto closed at a record high of 21,061.91, a gain of 116.94 points, while major U.S. indices - the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite - also registered all-time highs.

The rally was particularly pronounced in Canada, driven largely by the materials sector, which soared 4.8 per cent. This performance reflects the ongoing strength in global commodity prices, particularly for metals, benefiting Canadian companies heavily involved in resource extraction and production. Nutrien Ltd. (NTR) saw a significant increase, closing up $2.83 to $142.02, indicative of the positive sentiment surrounding the sector. Magna International Inc. (MG) also contributed to the gains, rising $2.83 to $259.05.

In the United States, the Dow Jones Industrial Average hit 39,000.96, a gain of 74.03 points, while the S&P 500 closed at 5,230.07, up 13.38 points. The technology-heavy Nasdaq Composite also participated, adding 98.33 points to reach 16,766.73. Shopify Inc. (SHOP) experienced a noteworthy jump, closing at $1,144.18, up $13.73, demonstrating continued investor confidence in the e-commerce giant.

Economic Data Fuels Optimism, But Risks Loom

Analysts attribute the recent market gains to a combination of factors, primarily positive economic data. BMO chief economist Douglas Porter highlighted that recent economic indicators have consistently exceeded expectations, fostering an optimistic outlook among investors. This positive data suggests that the North American economies are proving more resilient than initially anticipated.

However, this optimism is tempered by persistent concerns about rising interest rates and inflation. Both the Bank of Canada and the Federal Reserve are expected to continue tightening monetary policy to combat inflationary pressures. The Bank of Canada has already signaled the likelihood of further rate hikes, and the Fed is widely anticipated to follow suit.

"The central banks are walking a tightrope," explains Ian Carmichael, Vice-President of Wealth Management at TD Direct Investing. "They need to bring down inflation without triggering a recession. It's a delicate balancing act, and any misstep could easily derail the market rally." The potential for higher rates to slow economic growth and negatively impact corporate earnings remains a significant risk.

Commodity Prices: The Canadian Advantage

The strong performance of the Canadian materials sector underscores the country's unique position as a major exporter of commodities. Global demand for resources, driven by infrastructure development in emerging markets and the ongoing energy transition, continues to support high prices. This has a disproportionately positive impact on the Canadian economy and stock market.

However, reliance on commodity prices also introduces a degree of vulnerability. A sudden downturn in commodity demand or a significant increase in supply could negatively impact the Canadian market. Analysts are closely monitoring developments in China, a major consumer of commodities, for any signs of slowing economic growth.

Canadian Dollar Strengthens Slightly

The Canadian dollar also benefited from the positive market sentiment, closing up 0.11 cents at 74.43 cents US. The strengthening Canadian dollar, while beneficial for Canadian consumers purchasing imported goods, can potentially weigh on export competitiveness. The interplay between commodity prices, interest rate differentials, and global economic conditions will continue to influence the currency's value.

Looking Ahead

While the current market momentum is encouraging, investors should remain cautious. The combination of potentially restrictive monetary policy and geopolitical uncertainties creates a complex environment. Diversification and a long-term investment horizon are crucial for navigating these challenges. Investors are advised to carefully assess their risk tolerance and consult with a financial advisor before making any investment decisions. The next few months will be critical in determining whether this rally can be sustained or if a correction is on the horizon.