The Toronto Stock Exchange surged to a new all-time high on Wednesday, fueled by strong quarterly earnings from Canada’s top banks and a rebound in energy stocks driven by rising oil prices. The positive momentum extended to U.S. markets as well, with the S&P 500 closing at its own record.
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The S&P/TSX Composite Index climbed 0.33% to finish the day at 28,433, surpassing its previous record. A major catalyst was Royal Bank of Canada (RBC), whose stock posted its biggest one-day gain since the pandemic. RBC shares closed up 5%—after spiking as much as 7.5% intraday—on the back of stronger-than-expected earnings and a smaller provision for loan losses than analysts had anticipated.
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RBC’s strong performance followed upbeat results earlier in the week from Bank of Montreal and Bank of Nova Scotia, further boosting investor optimism around the financial sector.
“The story here is simple: earnings,” said Barry Schwartz, Chief Investment Officer at Baskin Wealth Management. “Corporate results have exceeded expectations, and it turns out the impact of tariffs on major North American firms has been less severe than feared.”
Investor sentiment has also improved significantly since April, when trade tensions sparked by U.S. President Donald Trump’s tariff threats sent markets reeling. Since that low point, the TSX has rebounded nearly 27%, as worst-case trade fears eased.
Financial stocks, which make up 32% of the TSX, gained 1.1% on the day. Energy stocks—second in weight at over 16%—also contributed to the rally, with the sector index rising 1.51%. Oil prices climbed after U.S. inventory data showed a larger-than-expected drop in crude supplies, and markets assessed the implications of new U.S. tariffs on India.
Despite the market’s strong showing, some investors remain cautious. Michael Sprung, President of Sprung Investment Management, warned that the rally may be overextended. He pointed to ongoing trade uncertainty, including Prime Minister Mark Carney’s continued struggles to finalize a trade agreement with the U.S.
“We’re still far from a deal that could be seen as a clear win,” Sprung said. “While earnings are clearly encouraging, there’s a real risk of market overheating given current investor enthusiasm.”
South of the border, the S&P 500 also ended at a record high ahead of highly anticipated earnings from chipmaker Nvidia. While Nvidia’s results exceeded expectations on both revenue and profit, the stock dipped slightly in after-hours trading as investors hoped for even stronger guidance.
The recent boom in AI-related stocks has powered much of the S&P 500’s gains. The index now trades at over 22 times projected earnings—the highest price-to-earnings ratio seen in four years, according to LSEG data. Some are beginning to question the sustainability of the rally, with OpenAI CEO Sam Altman recently cautioning about a potential AI-driven market bubble.
By the close of trading, the S&P 500 rose 0.24% to 6,481.40, breaking its previous record from August 14. The Nasdaq added 0.21% to 21,590.14, and the Dow Jones Industrial Average advanced 0.32% to 45,565.23.
Of the 11 S&P 500 sectors, eight finished higher, led by energy stocks with a 1.15% gain, followed by a 0.48% rise in the tech sector.
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