As mid-October marks the return of students to school and university mid-terms, a review of the stock market’s performance reveals several notable trends in both Canada and the United States.
Contrary to popular belief that technology continues to lead, the energy sector has been the top performer this year. In Canada, the energy sector of the Toronto Stock Exchange (TSX) has risen approximately 33 percent, while in the U.S., energy stocks have climbed about 50 percent. This surge has been driven largely by ongoing geopolitical tensions and supply constraints that have bolstered commodity prices. Additionally, corporate activity has supported the Canadian energy market, highlighted by significant takeovers such as those involving MEG Energy Corp., ARC Resources Ltd., and the recent acquisition announcement concerning Athabasca Oil Corp.
Looking ahead to earnings expectations for 2027, forecasts suggest continued growth, albeit with some uncertainty. U.S. corporate earnings are projected to increase by around 16 percent next year, while Canadian earnings are expected to grow between 11 and 12 percent. Market analysts caution, however, that while earnings growth typically supports equity markets, inflation trends may play a more decisive role in the short term, potentially impacting overall market performance regardless of earnings.
Investors also face contrasts in yield between stocks and fixed-income options. In Canada, the highest one-year Guaranteed Investment Certificate (GIC) rates have reached approximately four percent at select credit unions and virtual banks. Meanwhile, dividend yields on major stock indices remain lower: the TSX Composite offers about 2.09 percent, the S&P 500 around 1.05 percent, the Dow Jones about 1.54 percent, and the Nasdaq Composite close to 0.53 percent. It is important to note that tax treatment of dividends, particularly in Canada, may affect the after-tax returns compared to guaranteed rates, and fixed income currently presents higher, more stable yields.
Assessing individual stock performance year to date, Bird Construction Inc. leads the TSX with shares rising about 160 percent, supported by new contracts and growth in data center projects. In the U.S., Moderna Inc., known for its COVID-19 vaccine, stands out on both the S&P 500 and Nasdaq 100 indexes with gains near 660 percent, driven by promising developments in its cancer vaccine research. Sandisk Corp. follows on the Nasdaq 100 with an increase of roughly 524 percent, buoyed by rising memory chip prices. Meanwhile, the Dow Jones is led by Cisco Systems Inc., which has gained approximately 47 percent this year.
When it comes to the most widely held stocks, Apple Inc. is considered the predominant equity in the United States, widely owned across indexes, pension funds, and exchange-traded funds. Apple shares have increased about 26 percent this year, and the company recently achieved a market capitalization of approximately US$5 trillion. In Canada, the Royal Bank of Canada ranks as the most commonly held stock, with millions of Canadians holding shares. The bank’s stock is up around 17 percent for the year, with a market value near $380 billion.
These insights reflect current market dynamics, emphasizing the influence of sector shifts, corporate earnings expectations, and investment yield comparisons as investors navigate the evolving financial landscape.